Shri Amitkumar Hasmukhbhai Shah, Baroda V. The Dy.CIT.,Circle-2(1), Baroda

ITA 199/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89630 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 25-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: BHAVESH SHAH
• Keywords: Business income; Revised return; Reason to believe
• Section: 143(3)

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO.199/AHD/2011 / ASSESSMENT YEAR: 2006-2007 SHRI AMITKUMAR HASMUKHBHAI SHAH 101, GAUTTAM APARTMENT B-21/22, RANG YOGI SOCIETY NR. SHRENIK PARK CROSS ROAD AKOTA, VADODARA 390 020. PAN : AGIPS 3476 L VS THE DCIT, CIR.2(1) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE(S) BY : SHRI BHAVESH SHAH REVENUE BY : SHRI D INESH SINGH, SR.DR / DATE OF HEARING : 15/06/2015 / DATE OF PRONOUNCEMENT: 19/06/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT( A)-II, BARODA DATED 22.9.2010. 2. THE GROUND NO.1 OF APPEAL READS AS UNDER: I. CHANGING THE HEAD OF INCOME FROM CPAITAL GAIN TO BUSINESS 1. THE LD.AO HAS ERRED IN LAW AND ON FACTS IN GIVING D IRECTION TO THE AO TO REWORK THE INCOME ON THE BASIS OF HON BLE ITAT DECISION IN THE CASE OF SUGARCHAND C. SHAH 37 DTR 345 (AHD.) WHEREIN IT WAS HELD THAT IF SHARES ARE H ELD FOR MORE THAN ONE MONTH, IT SHOULD BE TREATED AS SHORT TERM ITA NO.199/AHD/2011 2 CAPITAL GAINS AND WHEN SHARE ARE HELD FOR LESS THAN ONE MONTH, GAIN ON THEM SHOULD BE TREATED AS BUSINESS INCOME. 2. THE LD.CIT(A) OUGHT TO HAVE ACCEPTED THE CONTENTION OF THE APPELLANT AND TREATED THE INCOME FROM SALE OF S HARES AS LONG TERM CAPITAL GAIN AND/OR SHORT TERM CAPIT AL GAINS, AS RETURNED. 3. AT THE TIME OF HEARING, THE LEARNED AR OF THE AS SESSEE SUBMITTED THAT HE IS NOT PRESSING THIS GROUND OF AP PEAL AND MADE AN ENDORSEMENT TO THIS EFFECT IN THE GROUNDS OF APP EAL APPENDED TO FORM NO.36 BY THEM BEFORE THE TRIBUNAL. THEREFO RE, THIS GROUND OF APPEAL IS DISMISSED FOR WANT OF PROSECUTI ON. 4. SECOND GROUND OF APPEAL OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF INCOME FROM M/S.CHANDAN CARRIER OF RS.1,07,890/-. 5. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE IS CARRYING ON TRANSPORT BUSINESS IN THE N AME OF M/S.CHANDAN CARRIER. ON ENQUIRY, HE FOUND THAT SHR I NILESH SHAH, OWNER OF THE SHRI NILESH SHAH, DID NOT OWN ANY TRUC K FOR ITS TRANSPORTATION BUSINESS. THE BUSINESS PREMISE OF S HRI NILESH SHAH WAS OWNED BY SHRI HASMUKH M. SHAH, FATHER OF THE AS SESSEE, FOR WHICH NO RENT WAS PAID BY M/S.CHANDAN CARRIER. FUR THER INQUIRY FROM HDFC BANK REVEALED THAT THE ASSESSEE WAS THE AU THORIZED SIGNATORY, POWER OF ATTORNEY HOLDER AND MANDATE HOL DER IN THE CASE OF M/S.CHANDAN CARRIER. THE BUSINESS ACTIVI TY OF M/S.CHANDAN CARRIER WAS LIMITED TO MOVEMENT OF TRUC K/TANKERS OWNED BY THE ASSESSEE. THEREFORE, THE AO HELD THAT THE ASSESSEE HAS ADOPTED COLOURFUL DEVICE TO AVOID TAXES BY DIVE RTING THE ITA NO.199/AHD/2011 3 INCOME IN THE NAME OF OTHER PARTY. THE AO OBSERVED THAT DURING THE YEAR, SHRI NILESH J. SHAH HAS SHOWN INCOME AMOU NTING TO RS.1,07,890/-, AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMIT TED THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF TRANSACTIO N TILL JANUARY, 2005 AND SHRI NILESH SHAH WAS HANDLING THE TANKERS OF THE ASSESSEE, AND WAS PAID HANDLING CHARGES. FROM JAN UARY, 2015, THE ASSESSEE DECIDED TO CLOSE THE TRANSPORTATION BU SINESS AND STARTED AGRICULTURAL OPERATIONS. HOWEVER, SHRI NI LESH SHAH, WHO WAS BROTHER-IN-LAW OF THE ASSESSEE, INSISTED ON THE ASSESSEE NOT TO SELL OF ALL TANKERS, BUT TO GIVE ALL TANKERS TO HIM FOR PLYING THE SAME FOR HIS TRANSPORTATION BUSINESS, AND THAT IS W HY ALL TANKERS FROM JANUARY, 2005 WERE GIVEN TO BROTHER-IN-LAW OF THE ASSESSEE, SHRI NILESH SHAH FOR RUNNING TRANSPORTATION BUSINES S IN HIS PROPRIETARY CONCERN, CHANDAN CARRIERS. ALL TANKERS WERE LYING IN THE PLOT OF FATHER OF THE ASSESSEE, M.H. SHAH, WHO IS HAVING OWN PROPRIETARY FIRM, M/S.SHAH CARRIERS FOR HIS TRANSPO RTATION BUSINESS. AS ALL TANKERS LYING IN THE PLOT OF H.M. SHAH, AND DUE TO HIS POOR FINANCIAL CONDITIONS, SHRI NILSH SHAH HAS NOT GIVEN ANY RENT TO H.M. SHAH. SHRI NILESH SHAH IS BROTHER-IN-LAW OF T HE ASSESSEE, AND GAVE AUTHORIZATION IN THE BANK ONLY TO SAFEGUAR D HIS INTEREST IN HIS BUSINESS, IF ANY CHEQUE IS REQUIRED TO BE SI GNED AND GIVEN TO ANY PERSON IN HIS ABSENCE. 6. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUB MITTED THAT HE HAS OFFERED INCOME OF RS,2,01,000/- UNDER SECTIO N 44AE OF THE ACT IN THE REVISED RETURN OF INCOME FILED ON 17.3.2 008, COPY OF ITA NO.199/AHD/2011 4 WHICH WAS PLACED AT PAGE NOS.4 TO 8 OF THE PAPER BO OKS. IT WAS SUBMITTED THAT ONCE INCOME WAS ALREADY CONSIDERED A ND ASSESSED BY THE AO U/S.44AE FOR HIS TRANSPORTATION INCOME, N O SEPARATE ADDITION IS REQUIRED TO BE MADE, WHICH WAS OTHERWIS E TANTAMOUNT TO DOUBLE TAXATION, WHICH WAS NOT PERMISSIBLE UNDER THE ACT. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEES CONTENTION THAT ALL THE PA PERS WERE IN HIS NAME, AND HE WAS SIGNING THE CHEQUE ONLY TO HELP HI S BROTHER-IN- LAW IS A SPACIOUS AGREEMENT. HE HAS NOT PRODUCED ANY EVIDENCE TO ESTABLISH THAT HIS BROTHER IN LAW WAS NOT LEGALL Y COMPETENT TO CARRY ON BUSINESS IN HIS NAME. THERE IS NO REASON TO BELIEVE THAT APPARENT IS NOT REAL. THAT THE ASSESSMENT HAS BEEN MADE IN SHRI NILSH SHAHS NAME IS APPARENTLY ON ACCOUNT OF MISLE ADING INFORMATION. HENCE, HE REJECTED THE APPEAL OF THE ASSESSEE. 8. BEFORE US, THE AR OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A). HE ALSO FILED C OPY OF THE ASSESSMENT ORDER FOR THE ASSTT.YEAR 2006-07 DATED 3 1.10.2008 PASSED IN THE NAME OF SHRI NILESH SHAH, WHICH IS PL ACED AT PAGE NO.36 TO 40 OF THE PAPER BOOKS, AND SUBMITTED THAT THE INCOME OF RS.1,07,890/- SHOWN FROM THE TRANSPORT BUSINESS BY SHRI NILESH SHAH HAS BEEN ASSESSED IN HIS ASSESSMENT YEAR 2006- 07 IN AN ORDER UNDER SECTION 143(3) OF THE ACT DATED 31.10.2 008. IT WAS THE ARGUMENT THAT THE SAME INCOME CANNOT BE ASSESSE D ONCE IN THE HANDS OF SHRI NILESH SHAH AND AGAIN IN THE HAND S OF THE ASSESSEE. HE, THEREFORE, PRAYED THAT THE ADDITION MADE SHOULD BE DELETED. ITA NO.199/AHD/2011 5 9. ON THE OTHER HAND, DR FULLY JUSTIFIED THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE AO MADE ADDITION OF RS.1,07,890/- BEING INCOME FROM M/S.CHANDAN CARRIERS, HOLDING THE ASSESSEE AS BENAMI OF HIS BROTHER-IN-LAW SHRI NILESH SHAH. ON APPEAL, THE CI T(A) CONFIRMED THE SAME. THE CONTENTION OF THE ASSESSEE IS THAT H E HAS SHOWN INCOME FROM TRUCK UNDER SECTION 44AE OF RS,2,01,000 /- WHICH INCLUDES INCOME OF RS.1,07,890/- FROM M/S.CHANDAN C ARRIERS, AND THEREFORE, NO SEPARATE ADDITION OF RS.1,07,890/- IS WARRANTED NONE OF THE LOWER AUTHORITIES HAS VERIFIED THIS CON TENTION OF THE ASSESSEE. FURTHER, THE CONTENTION OF THE ASSESSEE IS THAT HE HAS TRANSFERRED THE TRUCKS OWNED BY HIM TO HIS BROTHER- IN-LAW, SHRI NILESH SHAH, AS IT HAD STARTED NEW BUSINESS OF AGRI CULTURE PRODUCTS, IS NOT SUBSTANTIATED WITH ANY EVIDENCE AS TO HOW AND ON WHAT TERMS, THE SAME WAS TRANSFERRED AND WHAT IS TH E CONSIDERATION RECEIVED. THEREFORE, THIS CONTENTION HAS BEEN RIGHTLY REJECTED BY THE LOWER AUTHORITIES. HOWEVER , WE ARE OF THE CONSIDERED VIEW THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THE MATTER BACK TO THE FILE OF THE AO TO VERIFY WHE THER INCOME FROM TRUCKS SHOWN AT RS.2,01,000/- UNDER SECTION 44 AE BY THE ASSESSEE IN THE RETURN OF INCOME INCLUDE INCOME FRO M M/S.CHANDAN CARRIERS. IF SO, NO FURTHER ADDITION O F RS.1,07,890/- TO THE INCOME OF THE ASSESSEE IS REQUIRED. WE, THE REFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS I SSUE AND RESTORE THE MATTER BACK TO THE FILE OF AO TO RE-ADJUDICATE THE ISSUE AFRESH ITA NO.199/AHD/2011 6 AFTER VERIFICATION AS PER THE LAW, AND AFTER ALLOWI NG REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 19 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 19 /06/2015