ITO, Ward - 29(4), Kolkata, Kolkata V. Shanti Bhartia, Kolkata

ITA 1824/KOL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59625 (ITAT-KOLKATA)
• Duration Of Justice: 42 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: P S DUTTA
• Assessee Lawyers: S M SURANA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] # # # # /I.T.A NO. 1824/KOL/2010 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WD-29(4), KOLKATA VS. SHANTI BHARTIA (PAN:AEGPB 3482 H) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 31/01/2012 DATE OF PRONOUNCEMENT: 07/03/2012 )* - . ! /FOR THE APPELLANT: SHRI P. S. DUTTA +,)* - . ! /FOR THE RESPONDENT: SHRI S. M. SURANA !/ / ORDER PER MAHAVIR SINGH, JM/ , : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XVI, KOLKATA IN APPEAL NO. 30/CIT(A)-XVI/WD.29(4)/09-10 DATED 29.04.2010. ASSE SSMENT WAS FRAMED BY ITO, WD-29(4), KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30.11.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO BY TREATING THE RECEIPTS OUT OF SALE OF SHARES AS INCOME FROM OTHER SOURCES INSTEAD OF LONG TERM CAPITAL GAIN AS DECLARED BY AS SESSEE. FOR THIS, REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE RECEIPTS ARISING OUT OF SALE OF THE IM PUGNED SHARES AS LTCG CONTRADICTING THE FINDINGS AND DOCUMENTARY EVIDENCES BROUGHT ON RECOR D? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) WAS JUSTIFIED IN NOT JUDGING THE TRANSACTION IN THE LIGHT OF HUMAN BEHAV IOR AND PREPONDERANCE OF PROBABILITY CONTRADICTING THE OBSERVATION OF THE APEX COURT IN VARIOUS CASES? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE VIEW OF THE LD. CIT(A) SHOULD BE VIEWED AS PERVERSE AS IT HAS FAILED TO TAKE COGNIZA NCE OF THE FACTS BROUGHT ON RECORD THAT THERE WAS NO CREDITWORTHINESS OF THE PURCHASERS OF THE IMPUGNED SHARES AND THE CIRCUITOUS TRANSACTIONS WERE TAILOR MADE THROUGH BROKERS TO BE NEFIT THE ASSESSEE UNDER THE VEIL OF TRANSACTIONS IN SHARES? 2 ITA NO. 1824/K/2010 SHANTI BHARTIA AY 07-08 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 27.07.2007 DECLARING TOTAL INCOME OF RS.3,22,581/-. ASSESSMENT WAS COMPLETED A T TOTAL ASSESSED INCOME OF RS.26,88,710/- BY MAKING ADDITION OF RS.23,06,133/-. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS DECLARED LONG T ERM CAPITAL GAIN OF RS.19,35,071/- ON SALE OF 12500 SHARES OF RADIANT FINANCE LTD., 800 SHARES OF LOTUSHOM LTD. AND 7000 SHARES TOPCOM LTD. THESE SHARES WERE CLAIMED TO HAVE PURCHASED F OR RS.3,71,062/- AND SOLD FOR RS.23,06,133/- RESULTING INTO GAIN OF RS.19,35,071/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE HAS FILED COPIES OF PURCHASE A ND SALE CONTRACTS, COPY OF DEMAT ACCOUNT AND COPY OF HER BANK STATEMENT IN SUPPORT OF HER CL AIM OF LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER ACQUIRED INFORMATION FROM CALCUTT A STOCK EXCHANGE AND AFTER MAKING SEVERAL OBSERVATIONS CONCLUDED THAT THE TRANSACTION S OF PURCHASE AND SALE OF SHARES WERE NOT GENUINE AND HENCE, THE ENTIRE SALE CONSIDERATION OF RS.23,06,133/- WAS ADDED TO THE INCOME OF ASSESSEE TREATING THE SAME AS INCOME FROM UNDISCLOS ED SOURCES. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER DETAILED DISCUSSION IN HIS APPELLATE ORDER DIRECTED TO DELETE THE ADDITION AS MADE BY ASSESSING OFFICER UNDER THE HEA D INCOME FROM OTHER SOURCES BY HOLDING AS UNDER: 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLAN T AND PERUSED THE ASSESSMENT ORDER. ON FACTS THERE IS NO DISPUTE THAT DURING THE RELEVA NT PREVIOUS YEAR, THE APPELLANT HAS DECLARED LONG TERM CAPITAL GAIN OF RS.19,35,071/- O N SALE OF SHARES OF M/S. RADIANT FINANCE LTD., LOTUSHOM LTD. AND TOPCOM LTD. THE SAI D CAPITAL WAS CLAIMED BY THE APPELLANT AS EXEMPTED U/S. 10(36) OF THE I.T. ACT. IT IS OBSERVED THAT IN SUPPORT OF HER CLAIM, THE APPELLANT HAS PRODUCED ALL THE PRIMARY D OCUMENTS BEFORE THE A.O. IN THE FORM OF BROKERS CONTRACT NOTES, DEMAT ACCOUNT AND BANK STATEMENT. HOWEVER, FOR THE REASONS MENTIONED ABOVE, THE A.O. WAS OF THE OPINION THAT T HE APPELLANT WAS ENGAGED IN THE ACTIVITY OF MONEY LAUNDERING AND THAT THE TRANSACTI ONS OF PURCHASE AND SALE WERE NOT GENUINE. THE A.O. HAS ALSO DISCUSSED ABOUT THE FLUC TUATION IN THE RATES OF SHARES WITHIN A SHORT SPAN OF TIME, PROFESSIONAL REPUTATION OF THE BROKERS INVOLVED AS WELL AS THE IDENTITY AND CREDITWORTHINESS OF ULTIMATE BUYERS OF THESE SH ARES. HOWEVER, I AM OF THE OPINION THAT IN SUPPORT OF HIS VARIOUS OBSERVATIONS, HE HAS NOT BROUGHT ANYTHING POSITIVE ON RECORD. THE A.O. HAS FAILED TO PROVE THAT THERE WAS ANY CON NIVANCE BETWEEN THE BROKER AND THE APPELLANT. ON THE CONTRARY, THE APPELLANT HAS PRODU CED ALL THE PRIMARY DOCUMENTS IN SUPPORT OF HER CLAIM THAT SHE HAS EARNED THE LONG T ERM CAPITAL GAIN ON SALE OF SHARES. I AM OF THE OPINION THAT THE PRIMARY EVIDENCES PRODUCED BY THE APPELLANT CANNOT BE BRUSHED ASIDE WITHOUT PROVING OTHERWISE. FROM THE RECORD IT IS EVIDENT THAT THE SHARES UNDER QUESTION WERE PURCHASED BY THE APPELLANT DURING FIN ANCIAL YEAR 2004-05 AND 2005-06 AND SAME WERE REFLECTED IN THE BALANCE SHEET AS ON 31.0 3.2005 AND 31.03.2006. THE PAYMENTS FOR PURCHASE OF THESE SHARES WERE MADE BY CHEQUE AN D SAME WERE ALSO CREDITED TO THE DEMAT ACCOUNT OF THE APPELLANT. ON SALE, THE DELIVE RY OF THESE SHARES WAS GIVEN FROM DEMAT ACCOUNT AND THE CONSIDERATION WAS RECEIVED BY CHEQUE. I FIND FORCE IN THE 3 ITA NO. 1824/K/2010 SHANTI BHARTIA AY 07-08 SUBMISSION OF THE APPELLANT THAT THE A.O. HAS PLACE D GREAT EMPHASIS ON THE IDENTITY AND CREDITWORTHINESS OF ULTIMATE BUYERS OF THE SHARES. BUT THE APPELLANT HAS NOT SOLD ANY OF THE SHARES DIRECTLY TO ANY OF THE BUYER AND THEREFORE, SHE WAS TOTALLY UNAWARE ABOUT THE IDENTITY AND CREDITWORTHINESS OF THESE PERSONS. THE SHARES WERE SOLD THROUGH THE BROKER THROUGH CSE AND THE APPELLANT WAS NOWHERE IN THE PI CTURE TO KNOW ABOUT THE IDENTITY AND CREDITWORTHINESS OF THE PURCHASERS. THERE IS FORCE IN THE SUBMISSION OF THE APPELLANT THAT SHE CANNOT BE HELD RESPONSIBLE IF ANY OF THE BUYER WAS NOT AVAILABLE OR HAS NOT DECLARED THE PURCHASE TRANSACTION IN HIS OR HER RETURN OF IN COME. FOR THAT THE TRANSACTION CARRIED OUT BY THE APPELLANT CANNOT BE TREATED AS NOT GENUI NE. I HAVE GONE THROUGH THE VARIOUS DECISIONS OF HONBLE I.T.A.T. ON THE ISSUE INVOLVED . SOME OF THE DECISIONS ARE DISCUSSED AS UNDER: WE NO NEED TO DISCUSS THE DECISION CITED BY CIT(A) 7. IN VIEW OF FACTS OF THE CASE AND PRIMARY DOCUMEN TARY EVIDENCES PRODUCED BY THE APPELLANT AND RESPECTFULLY FOLLOWING THE DECISIONS OF JURISDI CTIONAL I.T.A.T. (SUPRA), IT IS HELD THAT THE A.O. WAS NOT JUSTIFIED IN TREATING THE SALE PROCEED S OF RS.23,06,133/- ON SALE OF SHARES, AS UNDISCLOSED INCOME. HE IS DIRECTED TO DELETE THE AF ORESAID ADDITION MADE BY HIM UNDER THE HEAD INCOME FROM OTHER SOURCES AND TO ACCEPT THE LO NG TERM CAPITAL GAIN DECLARED BY THE APPELLANT. THE GROUND NOS. 2 TO 5 ARE ALLOWED. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 4. WE FIND THAT IN ORDER TO PROVE THE TRANSACTIONS OF PURCHASE AND SALES OF AFORESAID SHARES, PRIMARY DOCUMENTS IN THE FORM OF BROKERS C ONTRACT NOTE, DEMAT ACCOUNT AND BANK STATEMENT WERE PRODUCED BEFORE THE A.O. THEREFORE, THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS ON HER TO PROVE THE CORRECTNESS OF NATURE AND QUANTUM OF INCOME DECLARED IN THE RETURN OF INCOME. THE A.O. IN THE ASSESSMENT ORDER HAS MADE S EVERAL OBSERVATIONS TO TREAT THE SALE PROCEEDS OF SHARES AS UNDISCLOSED INCOME. IT WAS AR GUED BY THE ASSESSEE THAT A.O. HAS NOT BROUGHT ANYTHING ON RECORD TO PROVE HIS ALLEGATIONS THAT THE ASSESSEE WAS ENGAGED OR INVOLVED IN THE ACTIVITIES OF MONEY LAUNDERING. WE FIND THAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THAT SHE PURCHASED 12500 SHARES OF RADIANT FINANCE LTD. THROUGH THE REGISTERED BROKER OF CALCUTTA STOCK EXCHANGE DEEPAK JHUNJHUNWALA & CO. ON 6TH & 7TH DECEMBER, 2004 FOR AN AMOUNT OF RS.1,02,250/-. THES E SHARES WERE APPEARING IN THE BALANCE SHEETS FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AS ON 31.03.2005 AND 31.03.2006. THE PAYMENT WAS MADE TO THE BROKER VIDE CHEQUE NO.6 33586 WHICH WAS DEBITED IN THE ACCOUNT OF ASSESSEE WITH THE CITY BANK ON 13.12.2004. THE S HARES WERE CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE MAINTAINED WITH HDFC BANK. SIMILARLY, THE ASSESSEE PURCHASED 800 SHARES OF LOTUSHOM LTD. AND 7000 SHARES OF TOPCOM LTD. IN THE MONTH OF JULY 2005 FOR RS.2,68,812/-. THE PAYMENT OF THESE SHARES WAS ALSO MADE BY CHEQUE S AND SHARES WERE CREDITED IN THE DEMAT 4 ITA NO. 1824/K/2010 SHANTI BHARTIA AY 07-08 ACCOUNT. THESE SHARES WERE ALSO APPEARING IN THE BA LANCE SHEET AS ON 31.03.2006. IT WAS ALSO SUBMITTED THAT ALL THE SHARES OF AFORESAID THREE SC RIPS WERE SOLD IN THE MONTH OF NOVEMBER 2006 AND ASSESSEES DEMAT ACCOUNT WAS DEBITED. THE SALE PROCEEDS WERE RECEIVED FROM THE BROKER BY CHEQUE AND THE SAME WAS DEPOSITED IN THE BANK ACCOU NT. WE FIND THAT IT WAS CONTENDED BY THE ASSESSEE THAT A.O. HAS LAID GREAT EMPHASIS ON THE I DENTITY AND CREDITWORTHINESS OF THE PURCHASERS OF THE SHARES. HOWEVER, THE ASSESSEE IS NOWHERE CONNECTED OR AWARE ABOUT THE IDENTITY OR CREDITWORTHINESS OF THE PURCHASERS OF T HE SHARES BECAUSE SHE HAS SOLD SHARES THROUGH THE REGISTERED BROKER OF CALCUTTA STOCK EXCHANGE AN D SHE WAS NOT AWARE AS TO WHOM SHARES OWNED, BY THE ASSESSEE WERE SOLD BY THE BROKER. IN VIEW OF THE ABOVE FACTS WE ARE OF THE VIEWS THAT THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR TH E IDENTITY OR CREDITWORTHINESS OF THE PURCHASERS. IN FACT, THE ASSESSEE HAS SOLD THE SHA RES THROUGH THE BROKER AND ON DELIVERY SHE HAS RECEIVED THE CONSIDERATION FROM THE BROKER. IT WAS ARGUED BY THE ASSESSEE THAT THE A.O. HAS MADE SERIOUS ALLEGATION AGAINST HER THAT SHE WAS ON E OF THE BENEFICIARY OF THE UNACCOUNTED MONEY ROUTED THROUGH THE ACCOUNTS OF KUSUM BAJAJ AN D USHA CHOUDHURY, WITHOUT ANY EVIDENCE THEREOF. NOWHERE IN THE ASSESSMENT ORDER, HAS THE A.O. MENTIONED THAT THE PRIMARY DOCUMENTS PRODUCED BY THE ASSESSEE IN SUPPORT OF HE R CLAIM OF CAPITAL GAIN, WERE FALSE OR FABRICATED. THOUGH, THE A.O. HAS CONDUCTED ENQUIRY FROM CSE, BUT EVEN STOCK EXCHANGE HAS NOT DENIED THAT THE ASSESSEE HAS CARRIED OUT TRANSA CTIONS OF PURCHASE AND SALE OF SHARES AS EVIDENCED BY THE CONTRACT NOTES. THE A.O. HAS NOT B ROUGHT ANYTHING ON RECORD TO PROVE THAT THE ASSESSEE WAS ENGAGED IN THE PRICE RIGGING OF THE SH ARES. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAS RIGHTLY HELD TH E EXCESS OF RECEIPTS AS LONG TERM CAPITAL GAINS AS CLAIMED BY ASSESSEE INSTEAD OF ASSESSMENT MADE BY AO AS INCOME FROM OTHER SOURCES. WE CONFIRM THE ORDER OF CIT(A) AND THIS ISSUE OF RE VENUES APPEAL IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 07.03.2 012. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 7 TH MARCH, 2012 01 $23 4 JD.(SR.P.S.) 5 ITA NO. 1824/K/2010 SHANTI BHARTIA AY 07-08 !/ - +5 6!5&7- COPY OF THE ORDER FORWARDED TO: 1 . ! /APPLICANT ITO, WARD-29(4), KOLKATA. 2 +,)* / RESPONDENT, SMT. SHANTI BHARTIA, 14C, RAJA SANTOS H ROAD, KOLKATA- 700 027. 3 . /$ ( )/ THE CIT(A), KOLKATA 4. /$ / CIT, KOLKATA 5 . >? +$ / DR, KOLKATA BENCHES, KOLKATA ,5 +/ TRUE COPY, !/$@/ BY ORDER, 3 /ASSESSMENT REGISTRAR .