Smt. Chandadevi Patodia, Surat V. The Income tax Officer,Ward-3(3), Surat

ITA 1782/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85758 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 18-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Unexplained cash credit; Share purchase agreement; Accommodation entries
• Section: 143(3); 54F; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER SMT. CHANDADEVI PATODIA 5/A, SAGAR APARTMENT, UMARA JAKATNAKA, SURAT PAN: AANPP3644C (APPELLANT) VS INCOME TAX OFFICER, WARD- 3(3), SURAT (RESPONDENT) ASSESSEE BY: SHRI MEHUL R. SHAH, A.R . REVENUE BY: SHRI B.L. YADAV, SR. D.R. DATE OF HEARING : 24-12-2014 DATE OF PRONOUNCEMENT : 04-03-20 15 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF CIT(A)-IV, SURAT DATED 19-03-2013 FOR A.Y. 2005-06. ITA NO. 1782/AHD/2013 ASSESSMENT YEAR 2005-06 I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 2 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIVING INCOME FROM PROPERTY, INTEREST INCOME AND CAPITAL GAINS. ASSES SEE FILED HER RETURN OF INCOME FOR A.Y. 2005-06 ON 30-03-2006 DECLARING TOT AL INCOME AT RS. 1,67,740/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 07-02-2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 11,88,238/-. AG GRIEVED BY THE ORDER OF AO, ASSSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) WHO UPHELD THE ORDER OF AO VIDE ORDER DATED 19-03-2013. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFO RE US AND HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS. 10,20,5 01/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT, 19 61 INSTEAD OF LONG TERM CAPITAL GAIN ON SALE OF SHARES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT ASSESSEE HAS SOLD SHARES OF FAST TRACK ENTERTAINMEN T LTD AND THE PROFIT OF RS. 10,2,288/- EARNED ON ITS SALE WAS CLAIMED AS LO NG TERM CAPITAL GAINS. AO ALSO NOTICED THAT ASSESSEE HAD STATED TO HAVE PU RCHASED 14,400/- SHARES AT RS. 1.22 PER SHARE ON 17-04-2003 AND HAS CLAIMED TO HAVE SOLD THE SHARES AT RS. 70.86 PER SHARE ON 30-09-2004. T HE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM AND EXPLAIN THE TRANSACT ION. ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE, AO NOTED THAT THE BROKER THROUGH WHOM ASSESSEE HAD CLAIMED TO HAVE MADE SALE AS WELL AS PURCHASE TRANSACTIONS HAD NOT CONFIRMED THE TRANSACTION AND NO UNIQUE NUMBERS APPEARED IN THE BROKERS NOTE FOR THE PURCHASE TRAN SACTION AND ASSESSEE HAD NOT FURNISHED THE DEMAT ACCOUNT TO SHOW THE PUR CHASE OF SHARES OF THE COMPANY. HE THEREFORE CONCLUDED THAT CONSIDERATION OF SHARES TO BE I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 3 UNEXPLAINED CASH CREDIT AND ACCORDINGLY ADDED THE A MOUNT OF RS. 10,20,501/- BEING THE SALE PRICE RECEIVED ON SALE O F SHARES AS INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESS EE CARRIED THE MATTER BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF AO BY HOL DING AS UNDER:- 5. DECISION:- FROM THE ASSESSMENT ORDER AND THE R EMAND REPORT OF THE A.O. AND SUBMISSIONS OF APPELLANT IT IS SEEN TH AT THE APPELLANT HAD CLAIMED TO HAVE PURCHASED 34,400 SHARES OF FAST TRACK ENTERTAINMENT LTD. AT 1.22/- PER SHARE. THE APPELLA NT HAS CLAIMED LONG TERM CAPITAL GAIN OF RS. 10,02,288/- ON SALE O F 14400 SHARES OF FAST TRACK ENTERTAINMENT LTD. WHICH HAS BEEN CLAIME D AS EXEMPT U/S. 54F AS BEING INVESTED IN RESIDENTIAL PROPERTY. HOWEVER, THERE ARE CERTAIN ASPECTS OF THESE TRANSACTIONS WHICH ARE VERY INTRIGUING. FROM PERUSAL OF THE PAPER BOOK FILED BEFORE THE HON 'BLE ITAT ON 11. 02.2009 BY THE APPELLANT THE FOLLOWING FACTS REGARD ING THIS ALLEGED SHARE TRANSACTION HAS EMERGED: 1) THE APPELLANT HAS CLAIMED TO HAVE BOUGHT SHARES OF FAST TRACK FROM VIJAY BHAGWANDAS & CO. AS UNDER :- SETTLEMENT NO. DATE NO. OF SHARES AMOUNT IN RS. 0304016 17.04.2003 22200 22,584/- 0304019 22.04.2003 12200 14,263/- 2) ON THE BROKER'S BILL DISTINCTIVE NUMBERS OF SHAR ES ARE NOT GIVEN. 3) NO DELIVERY NOTES HAVE BEEN ISSUED BY BROKERS GIVING THE DISTINCTIVE NOS OF THE SHARES PURCHASED. 4) THE APPELLANT FAILED TO FURNISH ORER NO. AND TRA DE NO. FOR PURCHASE OF THESE SHARES. 5) INTERESTINGLY SERIAL NO. 21 OF THE PAPER BOOK SU BMITTED BEFORE HONBLE ITAT IS THE LETTER DATED 11-04-2003 ISSUED BY THE FAST TRACK ENTERTAINMENT LTD STATING AS FOLLOW:- THIS HAS REFERENCE TO YOUR LETTER AND TRANSFER DEE DS FORWARDED TO US ALONG WITH THE SHARE CERTIFICATES TO TRANSFER THE S AME IN YOUR NAME. WE ARE ENCLOSING BELOW MENTIONED SHARE CERTIFICATE DULY TRANSFERRED IN YOUR NAME. SL. CERTIFICATE NO. NO. OF DISTINCTIVE NO. SHARES I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 4 NO. FROM TO CERTIFICATES FROM TO 1 24844 - 24943 100 5484301-594300 22200 2 24744 - 25065 122 5494301- 5506500 12200 222 TOTAL 34400 PLEASE ACKNOWLEDGE THE RECEIPT 6) IN OTHER WORDS, THE APPELLANT HAS SUPPOSED WRITT EN A LETTER TO FAST TRACT ENTERTAINMENT LTD. BY WHICH SHE HAD FORW ARDED THE TRANSFER DEEDS FOR GETTING THE SHARE CERTIFICATES T RANSFERRED IN HER NAME MUCH BEFORE SHE ACTUALLY BOUGHT THE SHARES. M ORE INTERESTLY FAST TRACT ENTERTAINMENT LTD. TRANSFERRED THE SHARE IN HER NAME ON 11/04/2003 MUCH BEFORE THE DATE OF ACTUAL PURCHASE, 17/04/2003 AND 22/04/2003. 7) MORE PERTINENTLY, FROM THE BROKERS BILL IT IS S EEN THAT 22200 SHARES HAVE BEEN SUPPOSEDLY BOUGHT IN LOTS OF 6598, 9513, 6089 WHILE 12200 SHARE HAVE BEEN BOUGHT IN LOTS OF 900, 1600, 1200, 600, 1100, 1600, 1400, 1100, 1800, AND 900 IN A DIFFERE NT SETTLEMENT PERIOD. BUT STRANGELY THE DISTINCTIVE NUMBER OF AL L THESE SHARES BOUGHT BY THE APPELLANT IN DIFFERENT LOTS ARE 54843 01-5506500 WHILE THEIR CERTIFICATE NOS. ARE 24844-25065 AS IT EVIDEN T FROM FAST TRACK'S LETTER DATED 11/04/2003. HAD SHARE TRANSACTIONS BEE N INDEED GENUINE THEN THE DISTINCTIVE NUMBERS OF SHARES BOUG HT IN ODD LOTS IN DIFFERENT SETTLEMENTS WOULD NOT BE HAVING THE DISTI NCTIVE NUMBERS IN CONSECUTIVE SERIAL NUMBERS FROM 5484301 - 5506500. THIS COINCIDENCE TOGETHER WITH SHARES BEING TRANSFERRED IN THE APPELLANT'S NAME MUCH BEFORE THEIR PURCHASE RAISE SERIOUS DOUBT ABOUT THE GENUINENESS OF THE SHARE TRANSACTIONS. 8) THE AO ISSUED NOTICE U/S. 133(6) TO M/S. VIJAY BHAGWANDAS & CO. ASKING THEM TO FURNISH VARIOUS DETAILS MENTIONE D IN PAGE-3 OF THE ASSESSMENT ORDER TO WHICH THERE WAS NO COMPLIAN CE. A SUBSEQUENT NOTICE U/S. 133(6) SENT TO THE BROKER WA S ALSO NOT COMPLIED WITH. THE SHARE BROKER, M/S, VIJAY BHAGWAN DAS & CO. DID NOT COMPLY TO THE NOTICE U/S. 131(6) ISSUED ON 09.1 0.2007 OR TO THE REMINDER NOTICE U/S. 133(6) ISSUED ON 02.11.2009. 9) DURING APPEAL AND REMAND PROCEEDINGS, THE APPE LLANT WAS ASKED TO GIVE THE PROOF OF PAYMENT FOR THESE PURCHA SES TO WHICH THE AR OF THE APPELLANT REPLIED THAT THE APPELLANT WAS TO RECEIVE R. 28,080/- & RS. 13,845/- FROM SAID BROKER ON ACCOUN T OF SALE OF I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 5 SHARES & AGAINST THIS AMOUNT RECEIVABLE FROM THE BR OKER, THE PURCHASES OF FAST TRACK ENTERTAINMENT SHARES HAS BE EN ADJUSTED. HOWEVER, THE APPELLANT FAILED TO GIVE ANY DOCUMENTA RY EVIDENCE THAT SHE HAD INDEED SOLD SHARES THROUGH THIS BROKER FOR WHICH SHE WAS TO RECEIVE RS. 28,080/- & RS. 13,845/-FROM SAID BROKER . THE NAME OF THE SHARES AND ITS QUANTITY, VALUE, DATE OF SALE ET C WERE ASKED FOR BUT NOT FURNISHED. THIS SUPPOSED SALE OF SHARES WOR TH RS. 28,080/- & RS.13,845/- DOES NOT SEEM TO BE DISCLOSED IN THE RE TURN OF INCOME FOR THE YEAR. 10) IT IS INTRIGUING HOW THE APPELLANT GOT SHARES HAVING DISTINCTIVE NUMBER IN THE SAME SERIAL ORDER WHEN THE PURCHASES HAVE BEEN MADE IN TWO DIFFERENT SETTLEMENT AND THAT TOO IN ODD LOTS. 11) ON 16.02.2004, FAST TRACK ENTERTAINME NT LTD. ISSUED TWO 'JUMBO CERTIFICATES NO. 090309, 090306 IN LIEU OF 12200 SHARE CERTIFICATES HAVING DISTINCTIVE NOS. 05494301 TO 05506500 (CERTIFICATE NO. 024944 -025065) AND 222000 SHARE C ERTIFICATES HAVING DISTINCTIVE NUMBERS 05484301 TO 05494300 (CE RTIFICATE NO. 024844 - 024943). 12) THE APPELLANT GOT THESE 'JUMBO SHARES'' TRAN SFERRED TO HER D MAT ACCOUNT ON 01/10/2004 FOR SALE THROUGH THE SAME BROKER, M/S. VIJAY BHAGWANDAS & COMPANY. 5.2 THE ABOVE FACTS PROVE BEYOND REASONABLE DOUBT T HAT THE APPELLANT HAS SHOWN BOGUS SHARE TRANSACTIONS OR TAK EN ACCOMMODATION ENTRIES FOR TRANSACTIONS IN PENNY STO CK WITH THE CONNIVANCE OF THE BROKER, M/S VIJAY BHAGUANDAS & CO MPANY AND THE COMPANY. FAST TRACK ENTERTAINMENT LTD. WHO HAVE ARRANGED BACK DATED PURCHASE BILLS OF SHARES. THE PURCHASE R ATE AVERAGING RS. 1.22 PER SHARE ON 17/21-04-2003 HAS INCREASED E XPONENTIALLY TO RS. 70.86/- ON 30.09.2004. THEREAFTER THE SAID PHYS ICAL SHARES, WHICH HAVE BEEN DELIVERED EVEN BEFORE THE PURCHASES TOOK PLACE, HAVE BEEN DEMATERIALIZED AND GOT SOLD. THERE IS NO DOCUMENTARY EVIDENCE FOR PAYMENT FOR PURCHASE OF THESE SHARES. ALL THE DOCUMENTS IN SUPPORT OF THE SHARE TRANSACTIONS HAVE BEEN FABRICATED IN COLLUSION WITH THE BROKER, VIJAY BHAGWANDAS & TH E COMPANY, FAST TRACK ENTERTAINMENT LTD. 5.3 THE ABOVE FACTS ESTABLISH BEYOND DOUBT THAT THE ALLEGED SHARE TRANSACTION WAS A SHAM TRANSACTION AND THE AO ACTIO N IN ADDING RS. 10,20,501/- AS UNEXPLAINED CASH CREDIT U/S 68 IS AC CORDINGLY UPHELD. I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 6 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. BEFORE US, LD. AR REITERATED THE SUBMIS SIONS MADE BEFORE AO AND LD. CIT(A). LD. AR FURTHER SUBMITTED THAT THE INVESTMENTS IN SHARES WERE MADE YEAR ENDING ON 31 ST MARCH, 2004 AND THE SAME WAS ALSO REFLECTED IN THE BALANCE SHEET. HE POINTED TO THE PAGE 22 OF THE PAPER BOOK OF THE BALANCE SHEET. HE ALSO POINTED TO THE COPY OF THE RETURN FOR A.Y. 2004-05 WHICH WAS FILED ON 22 ND MARCH, 2005 AND PLACED AT PAGE 22 OF PAPER BOOK. HE FURTHER POINTED TO PAGE 14 OF TH E PAPER BOOK BEING THE DEMAT ACCOUNT MAINTAINED WITH HDFC BANK WHEREIN THE SHARES WERE REFLECTED. LD AR FURTHER SUBMITTED THAT FOR THE PU RPOSE OF SECTION 68 THE ASSESSEE HAS TO PROVE IDENTITY, GENUINENESS AND CRE DITWORTHINESS OF THE TRANSACTION WHICH HAS BEEN PROVED IN THE PRESENT CA SE. HE FURTHER SUBMITTED THAT SIMILAR ADDITION ON ACCOUNT SALE OF SHARES OF FAST TRACK ENTERTAINMENT LTD WAS MADE IN CASE OF ANIL N. GOEL AND OTHERS BUT THE ADDITION WAS DELETED BY TRIBUNAL VIDE ORDER DATED 1 9-04-2013. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER AT PAGE 4 0 TO 75 OF THE PAPER BOOK. HE THEREFORE SUBMITTED THAT THE ADDITION MAD E BY THE AO BE DELETED. LD. DR ON THE OTHER HAND SUPPORTED THE OR DER OF AO AND LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BEFORE US ASSESSEE HAS SUBMITTED THAT THE SHARES WERE PURCHASED IN EARLIER YEARS AND WERE REFLECTED IN IT S BALANCE SHEET AND HAD ALSO PLACED ON RECORD THE COPY OF THE DEMAT ACCOUNT WHEREIN THE SHARES ARE REFLECTED. WE FIND THAT SIMILAR ADDITION WAS M ADE IN THE CASE OF ANIL N. GOEL AND OTHERS. WE FIND THAT THE CO-ORDINATE BENC H OF TRIBUNAL AFTER RELYING UPON THE VARIOUS DECISIONS CITED IN THE ORD ER DELETED THE ADDITION BY HOLDING AS UNDER: I.T.A NO. 1782/AHD/2013 A.Y. 2005-06 PAGE NO SMT. CHANDADEVI PATODIA VS. ITO 7 11. SINCE FACTS OF THE IMPUGNED APPEAL ARE IDENTI CAL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL CITED (SUPRA), THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL UNDER IDENTICAL FACTS AND CIRCUMSTANCES WE ARE OF THE CONSIDERED OP INION THAT THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION U/S. 10(38) OF LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF SHARES OF FAST T RACK ENTERTAINMENT LTD. DECIDED BY HIM. ACCORDINGLY, THE ORDER PASSED BY THE LD. CIT(A) IS SET-ASIDE AND THE AO IN DIRECTED TO ALLOW THE CL AIM OF THE ASSESSEE . 6.1 BEFORE US REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SUBMISSIONS OF THE ASSESSEE NOR HAS BROUGHT ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE FOLL OWING THE ORDER OF CO- ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ANIL N. G OEL AND OTHERS (SUPRA) HOLD THAT NO ADDITION CAN BE MADE IN THE PRESENT CA SE. WE THEREFORE DIRECT ITS DELETION. IN THE RESULT, GROUND OF THE ASSESSE E IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 04/03/2015 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,