Income Tax Officer, Ludhiana V. Sh.Pradeep Aggarwal, Ludhiana

ITA 173/CHANDI/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5334 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Section: 68

Judgement Text

S , , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH . . , !!'# , $%& BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.173/CHD/2017 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD-2(2), LUDHIANA. SH.PARDEEP AGGARWAL, VILLA NO.7, COUNTRY HOUSE, LUDHIANA. ./ PAN NO.ADGPA3453N / APPELLANT / RESPONDENT /ASSESSEE BY : SHRI MANJIT SINGH, SR. DR ! / REVENUE BY : SHRI SUDHIR SEHGAL, ADV. & SHRI ASHOK GOYAL, CA '# $ /DATE OF HEARING : 24.01.2019 %&'(# /DATE OF PRONOUNCEMENT: .01.2019 %' /ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGITATING THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.2,39,48,575/- MADE BY THE A.O. U/S 68 OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) 2. BRIEF FACTS RELEVANT TO THE ISSUE UNDER CONSIDER ATION ARE THAT DURING THE YEAR, THE ASSESSEE HAD SOLD SHA RES PURCHASED DURING FINANCIAL YEAR 2009-10 ON WHICH RS .2.39 CRORES WAS SHOWN AS LONG TERM CAPITAL GAIN, WHICH W AS CLAIMED EXEMPT U/S 10(38) OF THE ACT. THE A.O. DISA LLOWED ITA NO.1161/CHD/2018 A.Y.2014-15 2 THE SAID EXEMPTION BY TREATING THE LONG TERM CAPITA L GAIN ON SALE OF SHARES SHOWN BY THE ASSESSEE, AS CASH CR EDIT U/S 68 OF THE ACT. 3. IN APPEAL, THE LD.CIT(A) DELETED THE ADDITION SO MADE BY THE A.O. BY RELYING UPON THE DECISIONS OF THE TR IBUNAL IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 20 10-11 AS WELL AS FOR ASSESSMENT YEAR 2011-12 ON IDENTICAL FACTS. THE CONCLUDING PART OF THE ORDER OF THE CIT(A) IS R EPRODUCED AS UNDER: FURTHER, FOR A.Y 2010-11, THE GROUND RELATING TO ADDITION REGARDING INVESTMENT IN THE SAID SHARES HE LD TO BE OUT OF UNDISCLOSED SOURCES BY THE ASSESSING OFFICER, WAS DECIDED IN FAVOUR OF THE APPELLANT BY FOLLOWING THE ORDER OF THE HON'BLE ITAT CHANDIGARH BENCH (SUPRA) FOR A.Y 20 11-12 IN THE APPELLANT'S OWN CASE WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE CASH-FLOW STAT EMENT PRODUCED BY THE APPELLANT AND THAT THE SHARES HAS B EEN ACTUALLY PURCHASED AND IT WAS FURTHER HELD BY THE H ON'BLE ITAT THAT IN THE FACE OF THE DOCUMENTARY EVIDENCE F ILED BY THE APPELLANT TO SUPPORT THE BONAFIDES OF THE APPELLANT, THE ASSESSING OFFICER MADE THE ADDITION ON LY ON THE BASIS OF SUSPICION AND SURMISES. THE ASSESSING OFF ICER HAS NOT BEEN ABLE TO BRING ON RECORD ANY ADVERSE MA TERIAL ON HIS OWN INVESTIGATION, AS IN A.Y 2011-12 AND THE H ON'BLE ITAT, THUS DECIDED THE MATTER IN FAVOUR OF THE APPE LLANT. GIVEN THE ABOVE FACTS AND CIRCUMSTANCES, CONSIDERIN G THE JUDICIAL PRECEDENT ON THE ISSUE AND FOLLOWING T HE ABOVE ORDERS PASSED BY THE CIT (APPEALS ) FOR A.Y 20 10-11 AND 2011-12 IN THE APPELLANT'S CASE AND ALSO RESP ECTFULLY FOLLOWING THE ORDER OF THE HON'BLE ITAT, CHANDIGARH BENCH(SUPRA) IN THE CASE OF THE APPELLANT FOR A.Y 2 011-12; THESE GROUNDS OF APPEAL ARE HEREBY ALLOWED. 4. ADMITTEDLY, UNDER SIMILAR FACTS AND CIRCUMSTANCE S, THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR ASSESS MENT YEAR 2011-12 IN ITA NO.407/CHD/2015 REPORTED IN (20 16) 70 TAXMANN.COM 154, HAS DISMISSED THE APPEAL OF THE DEPARTMENT VIDE ORDER DATED 11.4.2016, OBSERVING A S UNDER: ITA NO.1161/CHD/2018 A.Y.2014-15 3 WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BE LOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. ON PER USAL OF THE ORDER OF THE LEARNED CIT (APPEALS}, WE DO NOT F IND ANY INFIRMITY IN THE SAME. THIS KIND OF TRANSACTION INVOLVE TWO ASPECTS I.E. PURCHASE OF SHARES AND SALE OF SHARES. THE CONTENTION OF THE ASSESSEE WAS THAT THE SHARES WERE PURCHASED IN THE PRECEDING ASSESSMENT YEAR THROUGH CASH. FOR THIS, THE CASH FLOW STATEMENT WAS FILED BY THE AS SESSEE AND ENQUIRIES WERE CONDUCTED BY THE ASSESSING OFFICER FROM KOLKATTA STOCK EXCHANGE, WHEREIN THE SHARES OF THE AMALGAMATING 15 COMPANY WERE LISTED. THE CONFIRMATI ON FROM KOLKATTA STOCK EXCHANGE AS WELL AS THE CONFIRMA TION MADE BY THE BROKERS THROUGH WHOM THE SHARES WERE PURCHASED BY THE ASSESSEE ARE ON RECORD, WHICH ARE IN FACT CULMINATION OF THE ENQUIRIES INITIATED BY THE ASSESS ING OFFICER HIMSELF. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ARRIVE AT THE FACT THAT THESE CONFIRMATIONS RECEIVED FROM STOCK EXCHANGE OR MADE B Y THE BROKERS IN THEIR STATEMENTS WERE NOT PROVED. IN SUC H CIRCUMSTANCES, WE CANNOT JUST BY INDULGING IN SURMIS ES BRUSH ASIDE THESE EVIDENCES ON RECORD. AS REGARDS TH E CASH FLOW STATEMENT, FROM THE PERUSAL OF THE ASSESSMENT O RDER, WE COULD NOT FIND ANY FINDING OR FACT RECORDED BY THE A SSESSING OFFICER, WHICH PROVES THAT SUCH CASH FLOW STATEMENT IS NOT CORRECT. REGARDING MAINTAINABILITY OF TWO BALANCE SHEE TS, THE SAME WAS EXPLAINED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. WE ARE IN AGREEMENT WITH THE SUBMISSION OF THE ASSESSEE THAT THE ASSESSEE BEING A N INDIVIDUAL, HE MAY NOT BE MAINTAINING PERSONAL BOOK S OF ACCOUNT AND INVESTMENTS WERE ROUTED THROUGH HIS CAPIT AL ACCOUNT. THEREFORE, THE SAME WERE SUBTRACTED FROM H IS CAPITAL ACCOUNT FROM THE BALANCE SHEET BELONGING TO HIS PROPERTY BUSINESS. THE ASSESSEE HAS DULY FILED HIS RE TURN FOR EARLIER ASSESSMENT YEAR TOGETHER WITH BALANCE SHEET. IN VIEW OF ALL THESE EVIDENCES, WE CANNOT DENY THAT THE SHAR ES WERE ACTUALLY PURCHASED BY THE ASSESSEE IN THE EARLIER ASSESSMENT YEAR. ANOTHER CONTENTION RAISED BY THE ASSESSING OFFICER IN HIS REMAND REPORT WAS WITH RESPEC T 16 TO THE DATE OF BILL AND DATE OF SHARE TRANSFER BEIN G 4.8.2009 AND 19.10.2009 RESPECTIVELY. WE DO NOT FIND THIS FACT HAVING ANY RELEVANCE TO THE ISSUE IN QUESTION. SINCE IT MAY BE THE CASE THAT THE TRANSFER OF SHARES MAY REQUIRE SOME T IME TO EXECUTE DUE TO SOME PROCEDURAL DIFFICULTIES. THE ASS ESSING OFFICER HAS ALSO CAST ASPERSIONS ON THE ASSESSEE AS TO HO W THE AMOUNT OF RS.2,89,43,382/-WAS TRANSFERRED TO THE PERSO NS FROM WHOM THE SHARES WERE PURCHASED FROM LUDHIANA T O KOLKATTA. WE DO NOT FIND THIS FACT TO BE OF ANY IMPOR TANCE. THE FACT THAT ALL OTHER EVIDENCES POINT TO THE FACT THAT ACTUALLY PURCHASES WERE MADE. IT IS NONE OF ASSESSIN G OFFICER'S CONCERN AS TO HOW THE CASH WAS TRANSFERRE D. 16. THE ASSESSING OFFICER HAS ALSO DOUBTED THE GENUINENESS OF THE COMPANY. THE SHARES PURCHASED WERE OF THE COMPANY B ND LIMITED, WHICH LATER GOT AMALGAMATED WITH M/S VINDUS HOLDING LIMITED. THE AMALGAMATION HAS BEEN EXECUTED B Y ITA NO.1161/CHD/2018 A.Y.2014-15 4 THE ORDER OF THE HIGH COURT. THE COPY OF THE HIGH CO URT'S ORDER IS ON RECORD. IN THESE CIRCUMSTANCES HOW THE GENUINENESS OF THE COMPANY CAN BE DOUBTED. WE DO NO T UNDERSTAND. THE COMPANY M/S VINDUS HOLDING LIMITED IS A COMPANY LISTED IN THE KOLKATTA STOCK EXCHANGE AND THE STATEMENTS OF THE DIRECTORS OF THIS COMPANY' WERE REC ORDED BY THE ASSESSING OFFICER IN KOLKATTA, WHEREBY THEY HA D CONFIRMED THE TRANSACTIONS OF SALE OF SHARE MADE BY THE ASSESSEE. THE 17 COMPANY WHICH IS LISTED IN A RECOGNIZ ED STOCK EXCHANGE, THE IDENTITY OF SUCH A COMPANY CANNO T BE DOUBTED. 17. WITH RESPECT TO THE SALE ASPECT OF THI S TRANSACTION, AS STATED HEREINABOVE IN THE STATEMENT S OF THE BROKERS OF THE COMPANY, THEY HAVE CONFIRMED THE TRANSACTION OF SALE. THE COMPANY WHOSE SHARES WERE S OLD IS A COMPANY LISTED IN KOLKATTA STOCK EXCHANGE BEING A RECOGNIZED STOCK EXCHANGE. THE EVIDENCES IN THE FORM O F CONTRACT NOTE, BANK ACCOUNT, DEMAT ACCOUNT, ETC. WE RE FILED BEFORE THE ASSESSING OFFICER, WHICH HAVE NOWHERE BEE N DOUBTED BY THE ASSESSING OFFICER, NEITHER IN HIS ASSES SMENT ORDER, NOR ANY OF THE REMAND REPORTS FURNISHED BY H IM. THE BROKERS THROUGH WHOM SALE WAS MADE HAD ALSO CONFIRM ED THE SALE OF SHARES. THE ASSESSING OFFICER HAS MADE THE DETAILED EXERCISE BY ANALYZING THE PERSONS WHO HAVE PURCHASED THE SHARES FROM THE ASSESSEE AND IN VIEW OF THE FACT THAT THESE PERSONS HAVE NOT SHOWN THE INVESTMEN TS IN THEIR BALANCE SHEETS, THE ADVERSE VIEW HAS BEEN TAK EN BY HIM. AS WE UNDERSTAND THAT ANY TRANSACTION RELATING T O SALE OR PURCHASE OF SHARES THROUGH A STOCK. EXCHANGE IS D ONE THROUGH A BROKER REGISTERED IN STOCK EXCHANGE. THE TRANSACTION IS BETWEEN THE SELLER AND THE BROKER. TH E SELLER NEVER KNOWS ON WHOSE BEHALF THE BROKER IS PURCHASING THE SHARES. A BROKER PURCHASES NUMBER OF SHARES OF A PA RTICULAR COMPANY FROM THE STOCK EXCHANGE AS PER THE DEMAND MADE BY HIS CLIENTS ON THEIR BEHALF, 18 SIMILARLY HE SELLS THE SHARES OF THAT VERY COMPANY TO VARIOUS PERSONS THRO UGH STOCK EXCHANGE AS PER THEIR REQUIREMENTS. THERE IS NO ONE TO ONE CONTACT BETWEEN THE SELLER AND PURCHASER OF THE SHA RES. IN SUCH CIRCUMSTANCES, WE DO NOT FIND ANY RELEVANCE OF A NY ADVERSE FACT WITH REGARD TO THE PURCHASER OF SHARES IN THE PRESENT SCENARIO. THEREFORE, NO ADVERSE INFERENCE CA N-BE DRAWN IN VIEW OF THE FACT THAT THE BUYERS OF THE SHAR ES WERE NOT GENUINE. 18. THE FACT THAT THE MARKET PRICE OF TH E SHARES OF THIS COMPANY WERE STATISTIC FOR A LONGER PERIOD, CAN NOT BE OF ANY SUBSTANCE SINCE MARKET PRICE OF ANY SHARE OF A NY COMPANY IS A RESULT OF NUMBER OF FACTORS WHICH CANN OT BE GENERALIZED AS DONE BY THE ASSESSING OFFICER. THERE MAY BE A NUMBER OF COMPANIES WHOSE PRICE REMAINS STABLE F OR A LONGER PERIOD. THIS FACT CANNOT PUT THE GENUINENESS O F THE COMPANY IN QUESTION. IN OUR VIEW, THIS IS ALSO NOT A RELEVANT FACT WITH REGARD TO PRESENT CONTROVERSY. THE COMPAN Y IS A ONE LISTED IN THE RECOGNIZED STOCK EXCHANGE. IN THIS CASE THE PRICES OF SHARES OF THE COMPANY ARE BEING TAKEN CARE OF BY THE SEBI ONLY. THERE IS NO FINDING OF FACT ON RECOR D THAT THE SHARES WERE SOLD AT A PRICE OTHER THAN THE ONE QUOTE D IN THE STOCK EXCHANGE ON THE SAID DATE. 19. THERE IS ANOTHER ITA NO.1161/CHD/2018 A.Y.2014-15 5 ASPECT OF THIS CASE THAT THE ASSESSEE HAS SOLD SHARE S AT RS.2,89,43,383/-, THE COST OF 19 ACQUISITION OF WHICH W AS RS.21,87,6751-. THE LONG TERM CAPITAL GAIN ARISING ON T HE SAID TRANSACTION WAS RS.2,67,55,708/-, WHICH WAS SHOWN BY THE ASSESSEE IN HIS COMPUTATION OF INCOME AND WAS CLAI MED AS EXEMPT UNDER SECTION 10{38J OF THE ACT. THE ASSES SING OFFICER HAS MADE THE ADDITION OF RS.2,67,55,708/- STA TING THE SAME TO BE ADDED UNDER SECTION 68 OF THE ACT. WE DO NOT FIND THIS ACTION OF THE ASSESSING OFFICER TO BE AS PER LA W. SECTION 68 OF THE ACT PROVIDES FOR ADDITION OF ANY AMOUNT APP EARING TO BE CREDITED TO THE ASSESSEE IN HIS BOOKS OF ACCOU NT DURING THE YEAR IN CASE THE ASSESSING OFFICER IS NOT SATISFIE D AS TO THE GENUINENESS OF THE SAME. THE CREDIT APPEARING IN ASSESSEE'S ACCOUNT IS AN AMOUNT OF RS.2,89,43,383/- BY DISALLOWING THE EXEMPTION UNDER SECTION 10(38! OF THE ACT AT RS.2,67,55,708/- CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THIS ALSO AMOUNTS TO DOUBLE TAXATION OR DOUBLE ADDITION OF THE INCOME IN VIEW OF THE FACT THAT THE SAME AMOUNT HAS ACTUALLY BEEN SHOWN BY THE ASSESSEE AS H IS INCOME IN HIS COMPUTATION OF INCOME THOUGH THE SAME H AS ALSO BEEN CLAIMED AS EXEMPT UNDER SECTION 10138] OF THE ACT. IN VIEW OF THE ABOVE, THE ACTION OF THE LEARNE D CIT 'APPEALS) IN DELETING THE ADDITION IS JUSTIFIED AND IS HEREBY UPHELD. 20. BEFORE CONCLUDING THE ISSUE, WE WOULD LIKE T O DEAL WITH TWO MORE CONTENTIONS OF THE DEPARTMENT IN THE GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL. FIR STLY, 20 THERE IS A MENTION OF APPLYING THE TEST OF HUMAN PROBABILITIES AS PROPOUNDED IN THE JUDGMENTS OF THE H ON'BLE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE (1971 ) 82 ITR 540 AND SUMATI DAYAL VS. CIT11985) 214 ITR801. WE ARE AWARE OF THE PROPOSITION LAID DOWN BY THE HON'BLE S UPREME COURT AND WE HUMBLY BOW DOWN BEFORE THE SAME. HOWEV ER, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE IN THE FACE OF NUMEROUS DOCUMENTARY EVIDENCES CRYING FOR BONAFIDE OF THE ASSESSES AS AGAINST ONLY SUSPICION A ND SURMISES IN FAVOUR OF THE DEPARTMENT, WE DO NOT HESI TATE TO HOLD THAT THE PROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT IS NOT APPLICABLE IN THE PRESENT CASE. EVEN T HE ASSESSING OFFICER HAS NOT ' BEEN ABLE TO BRING ON REC ORD ANY ADVERSE MATERIAL, ON HIS OWN INVESTIGATIONS, THE RESUL TS HAVE BEEN IN FAVOUR OF THE ASSESSES. SUSPICION, HOWS OEVER STRONG, CANNOT TAKE PART OF THE DOCUMENTARY EVIDENC ES. SECOND CONTENTION OF THE DEPARTMENT WITH RESPECT TO THE PRICES BEING MANIPULATED AND LATER ON THE COMPANY DELISTED FROM THE STOCK EXCHANGE, WE WANT TO ADD TH AT THE COMPANY WAS VERY MUCH IN EXISTENCE AT THE TIME OF TRANSACTION AND WHATEVER HAPPEN LATER ON IS OF NO RELEVANCE. THE GROUNDS OF APPEAL RAISED BY THE REVEN UE ARE DISMISSED. 5. THE SAID ORDER OF THE TRIBUNAL HAS ALSO BEEN FOL LOWED IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2010- ITA NO.1161/CHD/2018 A.Y.2014-15 6 11 IN ITA NO.1138/CHD/2016, ORDER DATED 9.5.2018 AN D WHEREBY THE APPEAL OF THE DEPARTMENT HAD BEEN DISMI SSED. 6. THE LD. DR COULD NOT BRING ANY NEW FACTS OR CIRCUMSTANCES JUSTIFYING ANY DEPARTURE FROM THE EAR LIER FINDING OF THE TRIBUNAL ON THE SAME ISSUE. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVEN UE. THE SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON28.01.2019. SD/- SD/- . . !'# (N.K. SAINI (SANJAY GARG ) / VICE PRESIDENT $%& / JUDICIAL MEMBER (%! /DATED: 28 TH JANUARY, 2019 * ) * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR