PATHIK C. THUMAR, NAVI MUMBAI V. I.T.O.23(3)(1), MUMBAI

ITA 198/MUM/2013

• Counselvise Citation: 19819914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: D C SEJPAL
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM) , AND B.R.BASKARAN (AM) , . . , ./ I.T. A. NO . 198 / MUM/2 0 13 ( / ASSESSMENT YEAR : 200 9 - 10 ) SHRI PATHIK C THUMAR, PLOT NO.72, PATHIK, SECTOR - 21, NERUL, NAVI MUMBAI - 400706 / VS. INCOME TAX OFFICER 23(3)(1), C - 10/401, 4 TH FLOOR, PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, MUMBA I - 400051 ( / APP LICANT ) .. ( / RESPONDENT ) ./ ./ PAN/GIRNO.: AHIPT8507A / APP LICANT BY : SHRI D C SEJPAL / RESPONDENT BY : SHRI PREMANAND J / DATE OF HEARING : 16 .4.2015 / DATE OF PRONOUNCEMENT : 1. 5. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30 - 11 - 2012 PASSED BY LD CIT(A) - 33, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD . CIT(A) IN CONFIRMING THE ASSESSMENT OF SALE PROCEEDS REALISED ON SALE OF SHARES MADE BY THE ASSESSING OFFICER DISBELIEVING THE CLAIM OF LONG TERM CAPITAL LOSS. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSING OFFICER RECEIVED THE INFORMATION THAT THE ASSESSEE HAS PURCHASED AN IMMOVABLE PROPERTY FOR A SUM OF RS.69,42,000/ - . WHEN ENQUIRED ABOUT THE SOURCES, TH E ASSESSEE SUBMITTED THAT HE HAD EARNED LONG TERM CAPITAL GAIN ON SALE OF SHARES AND THE SALE PROCEEDS THEREOF AMOUNTING TO RS.92,14,781/ - WAS ITA NO. 198 / MUM/20 1 3 2 USED FOR PURCHASE THE IMMOVABLE PROPERTY. THE ASSESSEE FURNISHED THE NAME OF SHARES SOLD BY HIM AS SANDUR MANAG EMENT. THE AO MADE ENQUIRIES WITH REGISTRAR OF COMPANIES AND BOMBAY STOCK EXCHANGE. BOTH THE AUTHORITIES REPORTED THAT THERE WAS NO COMPANY BY NAME SANDUR MANAGEMENT. THE ASSESSEE CLAIMED TO HAVE SOLD THE SHARES THROUGH A SHARE BROKER NAMED M/S VIJAY BHAGAWANDAS & CO. THE SAID SHARE BROKER DISOWNED THE SALE BILLS SUBMITTED BY THE ASSESSEE. THE ASSESSEE HAD PURCHASED THE SHARES THROUGH ANOTHER SHARE BROKER NAMED M/S JASANI CAPITAL SERVICES LTD AND ENQUIRIES WERE MADE WITH THE SAID COMPANY, IT INFORME D THAT IT COULD NOT PROVIDE REQUISITE INFORMATION AS THERE WAS A FIRE IN THE PREMISES AND THE RECORDS WERE DESTROYED. 3. WHEN THE AO CONFRONTED ALL THESE DETAILS WITH THE ASSESSEE, THEN THE ASSESSEE CLARIFIED THAT THE NAME OF THE COMPANY WAS SANDHUR M ANGANESE AND IRON ORES LTD AND NOT SANDUR MANAGEMENT. THE AO ASKED FOR FURTHER DETAILS, BUT THERE WAS NO RESPONSE FROM THE ASSESSEE. HENCE THE AO TREATED THE ENTIRE SALE PROCEEDS OF RS.92,14,781/ - AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT TREATING T HE SAME AS UNEXPLAINED CASH CREDITS. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. BOTH THE PARTIES ARGUED BEFORE US SUPPORTING THEIR RESPECTIVE CASE. THE LD A.R HEAVILY PLACED RELIANCE ON THE DOCUMEN TARY EVIDENCES FURNISHED BY THE ASSESSEE TO SUPPORT THE CLAIM OF PURCHASE AND SALE OF SHARES. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS DULY DECLARED THE PURCHASE OF SHARES IN THE INCOME TAX RETURN FILED FOR AY 2004 - 05 ONWARDS TILL THE SHARES WERE SOLD I N THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2009 - 10. HE SUBMITTED THAT THE ASSESSEE HAS SOLD THE SHARES AFTER HOLDING THE SHARES FOR ABOUT FIVE YEARS. HE FURTHER SUBMITTED THAT THE SHARE BROKER, THROUGH WHOM THE SHARES WERE SOLD, HAS DISOWNED TH E SALE BILLS BY STATING THAT THE BROKING COMPANY HAS BEEN CLOSED, BUT THE UNDATED ITA NO. 198 / MUM/20 1 3 3 REPLY TO THE ASSESSING OFFICER WAS GIVEN IN THE LETTER HEAD OF M/S VIJAY BHAGAWANDAS & CO ONLY, WHICH CLEARLY SHOWS THAT THERE IS SOME FAULT AT THEIR END. THE SHARE BROKER, T HROUGH WHOM THE SHARES WERE PURCHASED, DID NOT DENY THE TRANSACTION, BUT HE COULD NOT CONFIRM THE SAME AS THE RECORDS WERE DESTROYED BY FIRE. THE LD A.R ACCORDINGLY SUBMITTED THAT THE ASSESSEE HAS DULY DISCHARGED HIS RESPONSIBILITIES AND THE ASSESSING OFFI CER HAS MADE THE IMPUGNED ADDITION ONLY ON SUSPICION AND SURMISES. 5. LD D.R ON THE CONTRARY SUBMITTED THAT THE PURCHASE AND SALE OF SHARES WERE NOT CONFIRMED BY THE RESPECTIVE BROKERS AND FURTHER THE ASSESSEE HAS ALSO FAILED TO SUBSTANTIATE THE VERACIT Y OF THE DOCUMENTS FURNISHED BY HIM, 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THE BROKER BILLS, THE NAME OF THE COMPANY IS STATED AS SANDUR MANG., IN SHORT FORM. HENCE IN THE FIRST INSTANCE, THE ASSESSEE HAS STATED THAT THE NAME OF THE COMPANY WAS SANDUR MANAGEMENT. ACCORDINGLY THE ASSESSING OFFICER CONDUCTED ENQUIRIES IN RESPECT OF THE COMPANY NAMED SANDUR MANAGEMENT. SINCE NO COMPANY EXISTS IN THAT NAME, IT IS QUITE NATURAL THAT THE ASSESSING OFFICER WOULD HAVE RECE IVED NEGATIVE REPLIES WITH REGARD TO THAT COMPANY. HOWEVER, SUBSEQUENTLY THE ASSESSEE HAS CLARIFIED THAT THE NAME OF THE COMPANY WAS SANDUR MANGANESE AND IRON ORES LTD. AFTER THE SAID CLARIFICATION, THE AO SEEMS TO HAVE NOT CONDUCTED ANY FURTHER ENQUI RY ABOUT SANDUR MANGANESE AND IRON ORES LTD. 7. THE ASSESSEE HAS FURNISHED A PRINT OUT TAKEN FROM INTERNET SITE TO SHOW THAT THE SAID COMPANYS SHARES ARE BEING TRADED REGULARLY. WE NOTICE THAT THE ABOVE SAID COMPANY IS HAVING IDENTIFICATION NUMBER AS 504918 WITH SCRIP ID SANDUMA. THUS THE FIRST DOUBT EXPRESSED BY THE ASSESSING OFFICER ABOUT THE EXISTENCE OF THE COMPANY STANDS CLARIFIED. WE NOTICE THAT THE LD CIT(A) HAS PROCEEDED WITH THE VIEW THAT M/S SANDUR MANG. (SHORT ITA NO. 198 / MUM/20 1 3 4 FORM GIVEN IN THE CONTRACT NOTES) IS NOT THE SHORT NAME OF M/S SANDUR MANGANESE AND IRON ORES LTD. WE NOTICE THAT THE ASSESSEE HAS ALSO FURNISHED THE PRICE MOVEMENT OF SHARES OF THE ABOVE SAID COMPANY. THE RATE AT WHICH THE ASSESSEE HAS SOLD THE SHARES BROADLY TALLIES WITH THE CL OSING PRICES GIVEN IN THE PRICE CHART. HENCE, WE ARE OF THE VIEW THAT THERE WAS NO REASON TO SUSPECT THAT THE NAME M/S SANDUR MANG DOES NOT REPRESENT M/S SANDUR MANGANESE AND IRON ORES LTD. 8. WE NOTICE THAT THE ASSESSEE HAS FURNISHED ALL DOCUMEN TS EVIDENCING PURCHASE AND SALE OF SHARES. THE PURCHASE BROKER COULD NOT AUTHENTICATE THE DOCUMENTS FURNISHED IN SUPPORT OF THE PURCHASE, FOR THE REASON THAT HIS RECORDS HAVE BEEN DESTROYED BY FIRE. THE ASSESSEE HAS FURNISHED FURTHER DOCUMENTS TO SHOW TH AT THE ABOVE SAID CLAIM WAS NOT A VOID CLAIM, I.E., THE ASSESSEE HAS FURNISHED CERTIFICATE FROM THE CONCERNED SOCIETY AS WELL AS THE COPY OF POLICE COMPLAINT. IN THE ABSENCE OF ANY FURTHER ENQUIRY/DOCUMENT TO DISPROVE THE ABOVE SAID CLAIM, WE ARE OF THE V IEW THE SAME IS REQUIRED TO BE ACCEPTED. FURTHER, IT IS A FACT THAT THE ASSESSEE HAS DISCLOSED THE PURCHASE OF SHARES IN HIS RETURN OF INCOME FILED FOR AY 2004 - 05 ONWARDS AND FURTHER THE ASSESSEE HAS HELD THE SAID SHARES FOR ABOUT FIVE YEARS. WE NOTICE T HAT THE LD CIT(A) HAS REJECTED THE SAID CLAIM FOR THE REASON THAT THE RETURNS OF INCOME FILED FOR AY 2004 - 05 ONWARDS WERE NOT SUBJECTED TO SCRUTINY. FURTHER, THE LD CIT(A) HAS POINTED OUT THAT THE FIGURES MENTIONED IN THE FINANCIAL STATEMENTS ATTACHED WIT H THE RETURN OF INCOME DID NOT MATCH WITH THE FIGURES REPORTED IN SARAL FORM. TO SUBSTANTIATE HIS FINDING, THE LD CIT(A) HAS STATED THAT THE LONG TERM CAPITAL GAIN DISCLOSED IN THE FINANCIAL STATEMENT FOR AY 2004 - 05 DID NOT FIND PLACE IN THE SARAL FOR M. IN OUR VIEW, THE OBSERVATIONS MADE BY LD CIT(A) ARE OUT OF CONTEXT, SINCE THE ERRORS, IF ANY, IN THE RETURNS OF INCOME FILED FOR AY 2004 - 05 CANNOT DISPROVE THE CLAIM OF PURCHASE OF ERRORS. FURTHER THE SAID ERRORS, IF ANY, ARE THE LOOK OUT OF THE ASSES SING OFFICER TO DEAL WITH THEM IN ACCORDANCE WITH THE LAW. THE ASSESSEE HAS DISCLOSED ITA NO. 198 / MUM/20 1 3 5 THE VALUE OF INVESTMENT AS RS.20,14,578/ - IN AY 2004 - 05 WITHOUT MENTIONING THE NATURE OF INVESTMENT. THOUGH THE LD CIT(A) IS FINDING FAULT WITH THE SAME, IN OUR VIEW, T HE SAID FACT IS ALSO NOT RELEVANT, SINCE THE ASSESSEE HAS FURNISHED DOCUMENTS TO CORROBORATE THE INVESTMENT IN SHARES TO THE EXTENT OF RS.20,14,578/ - . WITH REGARD TO THE PAYMENTS MADE FOR PURCHASE OF SHARES, THE ASSESSEE HAS FURNISHED CERTAIN BANK ACCOUNT S. HOWEVER, THE LD CIT(A) HAS EXPRESSED DOUBT ABOUT THE SAME ALSO. IN OUR VIEW, IT IS A MATTER OF RECONCILIATION AND FURTHER THE ASSESSEE IS BEING ASKED TO PROVE CERTAIN TRANSACTIONS ENTERED ABOUT EIGHT YEARS BACK THAT TOO OVER AND ABOVE THE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE. 9. WITH REGARD TO THE SALE OF SHARES, THE ASSESSEE HAS FURNISHED THE RELEVANT CONTRACT NOTES AND BILLS. THE ASSESSING OFFICER HAS DISBELIEVED THE SAME ONLY FOR THE REASON THAT THE CONCERNED BROKER HAS DISOWNED THE SA LE BILLS. HOWEVER, THE SELLING RATE SHOWN IN THE SALE BILL BROADLY MATCHES WITH THE SHARE PRICE MOVEMENT GIVEN IN THE CHART DOWNLOADED FROM THE INTERNET SITE, MEANING THEREBY, THE SALE VALUE STANDS CORROBORATED. FURTHER, AS SUBMITTED BY THE ASSESSEE, THE REPLY LETTER IS GIVEN BY M/S VIJAY BHAGAWANDAS & CO, ON ITS LETTER HEAD AND THE SAME MENTIONS THAT THE ABOVE SAID BROKER IS STILL A MEMBER OF BOMBAY STOCK EXCHANGE. HOWEVER, IN THE REPLY, THE ABOVE SAID SHARE BROKER HAS STATED THAT THE CONCERN VIJAY BHA GAWANDAS & CO. WAS DISSOLVED. THUS, IT IS SEEN THAT THE REPLY GIVEN IS CONTRADICTORY TO THE FACTS AVAILABLE ON THE LETTER HEAD OF THE ABOVE SAID BROKER. ACCORDINGLY, WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE REPLY GIVEN BY THE BROKER IS NOT RELIABLE. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEES CLAIM OF SALE OF SHARES OF M/S SANDUR MANGANESE & IRON ORES LTD CANNOT BE DISBELIEVED, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 198 / MUM/20 1 3 6 ACCORDINGLY, WE SET ASIDE TH E ORDER OF LD CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION MADE U/S 68 OF THE ACT. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1ST MAY ,2015 . 1ST MAY,2015, SD SD ( / JOGINDER SINGH ) ( . . , / B.R. BASKARAN ) / JUDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI: 1ST MAY ,201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERN ED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI DATE INITIALS 1. DRAFT DICTATED ON 1.5. 2015 SPS 2. DRAFT PLACED BEFORE AUTHOR 1.5. 2015 SPS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCU SSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SPS 6. KEPT FOR PRONOUNCEMENT ON SPS 7. FILE SENT TO THE BENCH CLERK SPS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO A.R. 10. DATE OF DISPATCH OF ORDER