Smt. Savitri Devi Jalan, Kolkata V. ITO, Ward - 28(2), Kolkata, Kolkata

ITA 1820/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54489 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A ROY
• Assessee Lawyers: M SATNALIWALA
• Keywords: Revenue expenditure
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA, AM & HONBLE S RI MAHAVIR SINGH, JM] #$ #$ #$ #$ / I.T.A NO. 1820/KOL/2010 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2007-08 SMT. SAVITRI DEVI JALAN VS. INCOME-TAX OFFICER, WD-28(2), KOLKATA (PAN ACPPJ 2600 Q) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI M. SATNALIWALA FOR THE RESPONDENT: SHRI A. ROY . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO 229/CIT(A)-XIV/09-10 DATED 30.08.2010. ASSESSMENT W AS FRAMED BY ITO, WD-28(2), KOLKATA U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-09 VIDE HIS ORDER DATED 29.12.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING ADDITION OF RS.59,39,153/- AS UNEXPLAINED SUNDRY CR EDITORS. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NOS.1 AND 2: 1) THAT THE LD. CIT(A)-XIV, KOLKATA WAS ERRED IN C ONFIRMING THE ADDITION OF RS.59,39,153/- FOR UNEXPLAINED SUNDRY CREDITORS. 2) THAT THE LD. CIT(A)-XIV, KOLKATA WAS ERRED IN CO NFIRMING THE ADDITION OF RS.59,33,153/- TREATING THE SAME AS CASH CREDIT U/S . 68 THOUGH THERE WAS NO CASH CREDIT DURING THE YEAR. 3. THE BRIEF FACTS ARE THAT ASSESSING OFFICER DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FILE DETAILS OF SUNDRY CRE DITORS CLAIMED IN HER BALANCE SHEET AS ON 31.3.2007. ASSESSING OFFICER ISSUED SHOW CAUSE NOTI CE DATED 23.11.2009 AND ASSESSEES COUNSEL FILED WRITTEN SUBMISSION STATING THAT THE A SSESSEE HAS RECEIVED 5487 EQUITY SHARES OF HINDUSTAN LEVERS LTD. FROM SMT. RADHA DEVI SANGANER IA ON SUCCESSION IN F.Y. 1998-99. THE ASSESSEE HAD 1/4 TH SHARE IN THE ASSETS OF SMT. RADHA DEVI SANGANERIA AND COPY OF SUCCESSION 2 ITA 1820/K/2010 SMT. SAVITRI DEVI JALAN. A.Y.07-0 8 CERTIFICATE WAS ALSO ATTACHED. ACCORDING TO ASSESS EE, SHARES RECEIVED IN SUCCESSION WERE TRANSFERRED IN DEMAT ACCOUNT OF ASSESSEE AND WAS SO LD DURING FY 2001-02. THE ASSESSEE FILED DETAILS OF SHARES, COPY OF DEMAT ACCOUNT, COPY OF B ANK ACCOUNT AND COPY OF CONTRACT NOTES OF SHARES SOLD IN FY 2001-02. THE ASSESSEE RECEIVED T OTAL SHARES 5487, OUT OF WHICH 2030 WERE SOLD IN FYS 1999-2000 AND 2000-01 AND BALANCE SHARE S OF 3457 WERE SPLIT INTO THE FACE VALUE OF RS.1/- FROM RS.10/-. ACCORDINGLY, TOTAL SHARES BECAME 34570 AND FURTHER 1500 SHARES WERE PURCHASED DURING THE YEAR AND HENCE, TOTAL SHARES B ECAME 36070. OUT OF THIS 27500 SHARES WERE SOLD AT A CONSIDERATION OF RS.61,40,953/- THRO UGH STOCK BROKER S G P SECURITIES LTD AND COST PRICE OF SHARES WERE AT RS.11800/-. THIS AMOU NT OF RS.61,29,123/- WAS SHOWN AS SUNDRY CREDITORS INSTEAD OF CREDITING THE SAME TO CAPITAL ACCOUNT. ACCORDING TO ASSESSEE, PROFIT EARNED FROM SALE OF SHARES WAS IN ASSESSMENT YEAR 2002-03 AND ACCORDINGLY, THESE CREDITORS CANNOT BE ADDED IN THE RELEVANT ASSESSMENT YEAR. THE ASSESSI NG OFFICER NOTED THAT ASSESSEE HAS FILED RETURNS OF EARLIER ASSESSMENT YEARS, WHICH REVEALED THAT THE ASSESSEE HAS CLAIMED THESE SUNDRY CREDITORS FROM AND FOR ASSESSMENT YEAR 2004-05 TILL THIS ASSESSMENT YEAR. THE ASSESSING OFFICER, HOWEVER, ADDED THESE CREDITORS BEING SUNDR Y CREDITORS PROVED TO BE FALSE ONE. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF ASSESSING OFFICER BY HOLDING AS UNDER: I HAVE EXAMINED THE VARIOUS DOCUMENTS SUBMITTED BY THE A/R REGARDING THE MANNER IN WHICH THE SHARES CLAIMED TO BE SOLD IN 2001-02 W ERE ACQUIRED BY THE ASSESSEE AND WERE SOLD BY HER. THE DOCUMENTS SHOW THAT THROUGH A COURT ORDER THE ASSESSEE RECEIVED CERTAIN SHARES OF M/S. HINDUSTAN LIVER LTD. FROM SM T. RADHA DEVI SANGANERIA ON SUCCESSION. THE CONTRACT NOTES ALSO SHOW THAT SOME SHARES OF M/S. HINDUSTAN LIVER LTD. WERE SOLD BY THE ASSESSEE DURING THE F.Y.2001-02. O N THE SALE OF THESE SHARES THE PAYMENTS WERE RECEIVED BY THE ASSESSEE FROM THE STO CK BROKER. IF THE PAYMENTS HAD BEEN RECEIVED BY THE ASSESSEE AND NO AMOUNT WAS DUE FROM BROKER, SHE SHOULD NOT HAVE SHOWN ANY AMOUNT AS SUNDRY CREDITORS. ON THE SALE P ROCEEDS OF THESE SHARES TAX SHOULD HAVE BEEN PAID AND THE PROFIT SHOULD HAVE BEEN INCL UDED IN THE CAPITAL ACCOUNT. THIS WAS NOT DONE. THEREFORE, IT CANNOT BE BELIEVED THAT THE SUNDRY CREDITORS APPEARING IN THE BALANCE SHEET AS ON 31.3.2007 ARE THE SALE PROC EEDS OF SHARES FOR F.Y. 2001-02. FURTHER THIS EXPLANATION OF THE ASSESSEE CANNOT BE BELIEVED BECAUSE THE AMOUNT OF RS.59,39,153/- APPEARING IN THE BALANCE SHEET AS ON 31.3.2007 IS QUITE DIFFERENT FROM THE AMOUNT OF RS.61,29,152/- CLAIMED TO BE CREDITED IN THE BALANCE SHEET AS ON 3L.3.2002. THE ASSESSEE HAS EXPLAINED THAT THE CHAN GE IN THIS BALANCE HAS OCCURRED BECAUSE CERTAIN AMOUNTS RECEIVABLE/PAYABLE TO M/S. S. K. P. SECURITIES HAS BEEN CLUBBED WITH SUNDRY CREDITORS OVER THE YEARS. IN VIEW OF THE ABOVE DISCUSSION I AM OF THE OPINIO N THAT THE ASSESEE HAS FAILED TO SATISFACTORILY EXPLAIN THE NATURE AND SOURCE OF THE AMOUNT OF RS.59,39,153/- FOUND CREDITED IN HER BOOKS IN THE PREVIOUS YEAR UNDER CO NSIDERATION. THEREFORE, THIS AMOUNT SHALL BE DEEMED TO BE THE INCOME OF THE ASSESSEE FO R A.Y 2007-08 U/S. 68 OF THE I. T. ACT. 3 ITA 1820/K/2010 SMT. SAVITRI DEVI JALAN. A.Y.07-0 8 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IT IS AN ADMITTED FACT BY ASSESSING OF FICER AS WELL AS CIT(A) THAT THE ASSESSEE HAS SOLD SHARES OF HINDUSTAN LEVERS LTD DURING F.Y. 200 1-02 AND DISCLOSED THE SALE PROCEEDS AS SUNDRY CREDITORS INSTEAD OF MAKING ADDITION TO CAPI TAL ACCOUNT, AS IS APPEARING IN THE BALANCE SHEET AND RETURNS OF INCOME FILED FOR AND FROM ASSE SSMENT YEAR 2002-03 TO 2006-07. EVEN THE SAME IS CARRIED FORWARD IN ASSESSMENT YEAR 2007-08 AND ONCE THIS IS THE POSITION THAT THE SUNDRY CREDITORS PERTAINED TO ASSESSMENT YEAR 2001- 02, WHEN THE ASSESSEE HAS SOLD THE SHARES AND THE PROCEEDS ARE LYING AS SUNDRY CREDITORS, THI S CANNOT BE ADDED IN THE RELEVANT ASSESSMENT YEAR. EVEN OTHERWISE, ASSESSEE HAS ACQUIRED THESE SHARES IN SUCCESSION FROM SMT. RADHA DEVI SANGANERIA I.E. 1/4 TH SHARE OF HER AND THESE SHARES WERE TRANSFERRED IN DEMAT ACCOUNT OF THE ASSESSEE COMPANY DURING 1998-99 AND THESE WERE SOLD IN ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS PRODUCED COMPLETE DETAILS INCLUDING RE TURNS FILED AND BALANCE SHEETS, P&L ACCOUNT FOR AYS 2002-03 TO 2006-07 DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND EVEN BEFORE CIT(A). HOW THE CREDITORS OF ASSESSMENT YEA R 2001-02 CAN BE ADDED IN THIS YEAR? AT THE BEST, AND THAT ALSO ACCORDING TO LAW, CAPITAL G AINS ARISING OUT OF SALE PROCEEDS OF SHARES CAN BE ADDED IN THE YEAR OF SALE I.E. IN ASSESSMENT YEA R 2001-02 AND NOT IN THIS YEAR. ACCORDINGLY, WE FIND NO REASON TO SUSTAIN THIS ADDITION AS CONFI RMED BY THE LOWER AUTHORITIES. HENCE, WE DELETE THIS ADDITION AND ALLOW THIS ISSUE OF THE AS SESSEES APPEAL. 5. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING ADDITION OF RS.32,662/- BEING UNEXPLAINED LOAN. FO R THIS, THE ASSESSEE RAISED THE FOLLOWING GROUND NO.3: 3. THAT THE LD. CIT(A)-XIV, KOLKATA WAS NOT JUSTIF IED IN CONFIRMING THE ADDITION OF RS.32,662/- FOR UNEXPLAINED LOAN. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS DISCLOSED RECEIPT OF LOAN OF RS.16,662/- AND RS.16,000/- FROM S. PRADHAN AND SANJAY JALAN RESPECTIVELY DURING THE YE AR UNDER CONSIDERATION. THE ASSESSEE NEITHER BEFORE ASSESSING OFFICER NOR BEFORE CIT(A) FILED ANY EVIDENCE OR DOCUMENT TO PROVE THAT THE ASSESSEE HAS RAISED LOANS FROM THESE TWO P ERSONS. EVEN NOW BEFORE US, THE ASSESSEE COULD NOT FILE ANY EVIDENCE OR MAKE ANY SUBMISSION. IN VIEW OF THIS, WE HAVE NO HESITATION IN CONFIRMING THE ORDER OF CIT(A). THIS ISSUE OF ASSE SSEES APPEAL IS DISMISSED. 4 ITA 1820/K/2010 SMT. SAVITRI DEVI JALAN. A.Y.07-0 8 7. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE CAPITAL GAIN ON SALE OF SHARES AS BU SINESS PROFIT AND ENHANCING THE PROFIT FROM RS.4.70 LACS TO RS.5.61 LACS. FOR THIS, THE ASSESS EE HAS RAISED FOLLOWING GROUND NO.4: 4) THAT THE LD. CIT(A) XIV, KOLKATA WAS ERRED IN C ONFIRMING THE CAPITAL GAIN ON SALE OF INVESTMENT IN SHARES AS BUSINESS PROFIT AND CONFIRM ING THE INCREASE IN PROFIT FROM RS.4,70,123/- TO RS.5,61,151/-. 8. BRIEF FACTS RELATING TO THE ABOVE ISSUE ARE THAT ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS SHOWN PROFIT FROM SALE OF SHARES AT RS.4.70 LACS AND CLAIMED PROFIT AS LON G TERM CAPITAL GAIN AND COMPUTED TAX @ 10%. THE ASSE SSING OFFICER NOTED THAT THE ASSESSEE HAS INVESTED HER BORROWED FUND IN THE SHARES AND, THEREFORE, HE TREATED THE PROFIT ON SALE OF SHARES AS BUSINESS PR OFIT INSTEAD OF CAPITAL GAINS AND ALSO ENHANCED PROFIT B Y DISALLOWING SOME LOSSES AT RS.5.61 LACS. AGGRIEV ED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIR MED THE ACTION OF ASSESSING OFFICER BY GIVING FOLLOWING FINDING IN HIS APPELLATE ORDER AT PARA 5: HERE I FIND THAT IN THE COMPUTATION OF INCOME THE ASSESSEE HAS TAKEN THE WHOLE AMOUNT OF RS.4,70,123/- AS CAPITAL GAINS AND HAS OFFERED T AX @ 10% ONLY. I FIND THAT THE ASSESSEE HAS FAILED TO EXPLAIN WHY THIS CAPITAL GAINS WILL B E TAXABLE @ 10%. IT IS SEEN THAT THE ASSESEE DEALS IN SHARES ON A LARGE SCALE. SHE HAS REGULARLY OWNED SHARES RUNNING INTO MORE THAN RS.3 LAKHS OVER PAST FEW YEARS AND HAS B EEN BUYING AND SELLING THE SHARES ON A REGULAR BASIS. THEREFORE, IT CAN BE SAID THAT TH E ASSESSEE IS INVOLVED IN THE BUSINESS OF TRADING OF SHARES. THEREFORE, THE A.O. HAS RIGHTLY TREATED THE PROFIT ON SALE OF SHARES AS BUSINESS PROFIT. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE HAS NOT BEEN ABLE TO SHOW ANY FAULT IN THE CALCULATION OF PROFIT ON SALE OF SHARES COMPUTED BY THE A.O. THEREFORE, THE AMOUNT OF RS.5,61,151/- DETERMINED B Y THE A.O. AS SHARE TRADING PROFIT IS CONFIRMED. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM DETAILS OF INVESTMENT IN SHARES DISCLOSED IN THE BALANCE SHEET FROM THE VERY BEGINNING I.E. 31.3.2001 TO 31.3.2007 THAT THE ASSESSEES SHARES A RE MOSTLY OLD SHARES SOLD DURING THE YEAR. HE HAS FILED THE DETAILS THAT SHARES SOLD ARE OF BATA INDI A LTD., OCL INDIA LTD., UNITED BREWERIES, HINDUSTAN LEVER LTD. ETC AND PROFIT EARNED FROM THESE ARE DIS CLOSED AS LONG TERM CAPITAL GAIN REASONS BEING THES E WERE HELD AS INVESTMENT BY THE ASSESSEE. WE FIND T HAT IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE IS NOT INVESTOR. EVEN INVESTMENTS ARE MORE THAN 6/7 YE ARS IN PARTICULAR SHARES WHICH ARE SOLD BY ASSESSEE . EVEN THE ASSESSEE HAS NOT INVESTED OUT OF BORROWED FUNDS AS THE ASSESSEE HAS LIQUID FUNDS AVAILABLE TO THE EXTENT OF RS.61.29 LACS BEING SALE PROCEEDS OF SHARES OF HINDUSTAN LEVER LTD. DURING FY 2001-02 APART FROM OWN CAPITAL. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT ASSESSEES INCOME IS FROM LON G TERM CAPITAL GAIN AND NOT BUSINESS PROFIT. ACCORDI NGLY, WE REVERSE THE ORDERS OF LOWER AUTHORITIES AN D THE ISSUE OF ASSESSEES APPEAL IS ALLOWED. 5 ITA 1820/K/2010 SMT. SAVITRI DEVI JALAN. A.Y.07-0 8 10. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS A GAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF REVENUE EXPENDITURE. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.5: 3) THAT THE LD. CIT(A) XIV, KOLKATA WAS NOT JUSTIF IED IN CONFIRMING THE DISALLOWANCE THE REVENUE EXPENDITURE OF RS.83,881/-. 11. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, LD. COUNSEL HAS NOT PRESSED THIS ISS UE AS THE AMOUNT INVOLVED IS VERY SMALL AND EVEN SHE IS UNABLE TO ATTRIBUTE THESE EXPENSES TO S HARE INCOME. ACCORDINGLY, THIS ISSUE IS DISMISSED AS NOT PRESSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 13. ORDER PRONOUNCED IN OPEN COURT ON 12.8.2011 SD/- SD/- . . , ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED 12TH AUGUST, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SMT. SAVITRI DEVI JALAN, IDEAL TOWER, 57, D. H. ROAD, BL-B, FLAT 10D & F, KOLKATA-23. 2 ,-*+ / RESPONDENT, ITO, WARD-28(2), KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .