M/s. M.K. Kandoi & Sons, HUF, Kolkata V. ITO, Ward - 35(4), , Kolkata

ITA 2085/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1422 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-03-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C.J.SINGH
• Keywords: Unexplained cash credit; Business income; Set aside; Capital Gains; Bogus
• Section: 147; 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SHRI S.S. GODARA, JM] I.T.A NO. 824/KOL/201 8 ASSESSMENT YEAR : 2012-1 3 SANTI RANJAN DAS VS- DCIT, CIRCLE-51, KOL KATA [PAN: ADFPD 9023 L] (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI A.K. TI BREWAL, FCA FOR THE RESPONDENT : SHRI C.J. SINGH, JC IT, SR. DR I.T.A NO. 2085/KOL/20 18 ASSESSMENT YEAR : 2015-1 6 M.K. KANDOI & SONS, HUF VS- ITO, WARD-35( 4), KOLKATA [PAN: AAFHM 9884 B] (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI SHRI K. M. ROY, FCA FOR THE RESPONDENT : SHRI C.J. SINGH, JC IT, SR. DR DATE OF HEARING : 04.03.2019 DATE OF PRONOUNCEMENT : 22.03.2019 ORDER 1. THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YE ARS 2012-13 & 2015-16 ARE DIRECTED AGAINST THE CIT(A)-15, KOLKATA & CIT(A)-10 , KOLKATAS ORDERS DATED 23.02.2018 & 27.07.2018 PASSED IN CASE NOS. 07/CIT (A)-15/16-17/CIRCLE-51/KOL & 2 ITA NOS.824 & 2085/KOL/2018 SANTI RANJAN DAS & M. K. KANDOI & SONS, HUF A.YRS. 2012-13 & 2015-16 2 1089/CIT(A)-10/WD-35(4)/15-16/2017-18/KOL, UPHOLDIN G THE ASSESSING OFFICERS ACTION TREATING THEIR LONG TERM CAPITAL GAINS OF RS . 22,92,2832/- AND RS. 41,51,877/- FROM SALE OF SHARES TO BE UNEXPLAINED CASH CREDIT U /S 68 OF THE ACT, INVOLVING PROCEEDINGS U/S 143(3) READ WITH SECTION 147 AND SE CTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT), RESPECTIVELY. HEARD THE ASSESSEES REITERATING THEIR RESPECTIVE S TANDS AGAINST IN SUPPORT OF THE IMPGUEND ADDITION. CASE FILE PERUSED. 2. IT TRANSPIRES AT THE OUTSET THAT THE SOLE ISSUE THAT REQUIRES MY APT ADJUDICATION IS AS TO WHETHER BOTH THE LOWER AUTHORITIES HAVE CORRECTLY M ADE THE IMPUGNED UNEXPLAINED CASH CREDIT ADDITION IN TWO ASSESSEES CASES. THERE IS N O DISPUTE BETWEEN THE PARTIES THAT THESE ASSESSEES HAVE CLAIMED THE IMPUGNED LONG TERM CAPIT AL GAINS ON SALE OF SHARES IN DIFFERENT SCRIPS. THEY HAVE DULY PLACED ON RECORD ALL THE CORRESPONDING EVIDENCE OF SALE/PURCHASE BANK STATEMENT(S), BROKERS CERTIFICA TE, CONTRACT NOTES, LEDGERS, DEMAT STATEMENT, BILLS, CONTRACT NOTES ETC. BEFORE THE AS SESSING OFFICER AS WELL AS CIT(A). BOTH THE LEARNED AUTHORITIES QUOTE, HONBLE APEX COURT DECISION IN SUMATI DAYAL VS CIT REPORTED IN [1995] 214 ITR 801 (SC) AND CIT VS. DUR GA PRASAD MORE REPORTED IN 82 ITR 540 (SC) TO CONCLUDE THAT THESE ASSESSEES HAVE INDULGED IN ARTIFICIAL RIGGING OF SCRIPS PRICES IN COLLUSION VARIOUS ENTRY OPERATORS/ PROMOTERS. THEY HAVE GONE BY CIRCUMSTANTIAL EVIDENCES THAN THE ASSESSEES DOCUME NTARY EVIDENCE WHILST MAKING THE IMPUGNED ADDITION. I FIND IN THIS BACKDROP OF FACTS THAT THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN MAHAVIR JHANWAR VS ITO, WARD-35(4), KOL KATA IN I.T.A. NO. 2474/KOL/2018 DECIDED ON 01.02.2019 HAS DELETED IDENTICAL ADDITIO N BY FOLLOWING DETAILED DISCUSSION: 2.THE SOLE ISSUE THAT ARISES FOR MY ADJUDICATION IS WHETHER THE ASSESSING OFFICER WAS RIGHT IN REJECTING THE CLAIM OF THE ASSESSEE THAT H E HAD EARNED LONG TERM CAPITAL GAINS ON PURCHASE AND SALE OF THE SHARES OF M/S UNNO INDU STRIES. THE AO BASED ON A GENERAL REPORT AND MODUS OPERANDI ADOPTED GENERALLY AND ON GENERAL OBSERVATIONS HAS CONCLUDED THAT THE ASSESSEE HAS CLAIMED BOGUS LONG TERM CAPITAL GAIN. HE MADE AN ADDITION OF THE ENTIRE SALE PROCEEDS OF THE SHARES AS INCOME AND REJECTED THE CLAIM OF EXEMPTION MADE U/S 10(38) OF THE ACT. THE EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF THE GENUINENESS OF THE TRANSACTION WAS REJECTED. 3 ITA NOS.824 & 2085/KOL/2018 SANTI RANJAN DAS & M. K. KANDOI & SONS, HUF A.YRS. 2012-13 & 2015-16 3 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL AND T HE LD. CIT(A), KOLKATA, HAD UPHELD THE ADDITION. THE LD. CIT(A) HAS IN HIS ORDER RELIE D UPON CIRCUMSTANTIAL EVIDENCE AND HUMAN PROBABILITIES TO UPHOLD THE FINDINGS OF THE AO. HE ALSO RELIED ON THE SO CALLED RULES OF SUSPICIOUS TRANSACTION. NO DIRECT MATERI AL WAS FOUND TO CONTROVERT THE EVIDENCE FILED BY THE ASSESSEE, IN SUPPORT OF THE G ENUINENESS OF THE TRANSACTIONS. IN OTHER WORDS, THE OVERWHELMING EVIDENCE FILED BY THE ASSESSEE REMAINS UNCHALLENGED AND UNCONTROVERTED. THE ENTIRE CONCLUSIONS DRAWN BY THE REVENUE AUTHORITIES, ARE BASED ON A COMMON REPORT OF THE DIRECTOR OF INVESTIGATION, K OLKATA, WHICH WAS GENERAL IN NATURE AND NOT SPECIFIC TO ANY ASSESSEE. THE ASSESSEE WAS NOT CONFRONTED WITH ANY STATEMENT OR MATERIAL ALLEGED TO BE THE BASIS OF THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT AND WHICH WERE THE BASIS ON WHICH CONCLU SION WERE DRAWN AGAINST THE ASSESSEE. COPY OF THE REPORT WAS ALSO NOT GIVEN. 4. THE LD. D/R, SUBMITTED THAT THE TRANSACTION WAS NOT GENUINE. HE ARGUED THAT THE ENTIRE CAPITAL GAIN WAS STAGE MANAGED BY A FEW OPER ATORS AND INVESTORS. HE RELIED ON THE ORDER OF LD. ASSESSING OFFICER AND ARGUED THAT THE SAME BE UPHELD. HE RELIED ON THE ORDER OF THE CHENNAI A BENCH OF THE TRIBUNAL IN T HE CASE OF M/S. PANKAJ AGARWAL & SONS (HUF) VS. ITO IN ITA NO. 1413 TO 1420/CHNY/201 8; ORDER DT. 06/12/2018, FOR THE PROPOSITION THAT SUCH CAPITAL GAINS HAVE TO BE BROU GHT TO TAX. HE ALSO RELIED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF SANJAY BIMALCHAND JAIN VS. PRINCIPAL COMMISSIONER OF INCOME-TAX-1, NAGPUR; [20 18] 89 TAXMANN.COM 196 (BOMBAY) AND THE DECISION OF THE SMT. M.K. RAJESHWA RI VS. ITO; ITA NO.1723/BNG/2018; ASSESSMENT YEAR 2015-16, ORDER DT . 12/10/2018. 5. AFTER HEARING BOTH SIDES, I FIND THAT IN A NUMB ER OF CASES THIS BENCH OF THE TRIBUNAL AND JURISDICTIONAL CALCUTTA HIGH COURT HAS CONSISTENTLY HELD THAT, DECISION IN ALL SUCH CASES SHOULD BE BASED ON EVIDENCE AND NOT ON GENERALISATION, HUMAN PROBABILITIES, SUSPICION, CONJECTURES AND SURMISES. IN ALL CASES ADDITIONS WERE DELETED. SOME OF THE CASES WERE, DETAILED FINDING HAVE BEEN GIVEN ON THIS ISSUE, ARE LISTED BELOW:- SL.NO ITA NOS. NAME OF THE AS SESSEE DATE OF ORDER /JUDGMENT 1. ITA NO.714 TO 718/KOL/2011 ITAT, KOLKATA DICT VS. SUNITA KHEMKA 28.10.2015 2 214 ITR 244 CALCUTTA HIGH COURT CIT VS. CARBO INDUSTRIAL HOLDINGS LTD. - 3. 250 ITR 539 CIT VS. EMERALD COMMERCIAL LTD. 23. 03.2001 4. ITA NO.1236- 1237/KOL/2017 MANISH KUMAR BAID VS. ACIT 18.08.2017 5. ITA NO.569/KOL/2017 GAUTAM PINCHA 15.11.2017 6 ITA NO.443/KOL/2017 KIRAN KOTHARI HUF 15.11.2017 7 ITA NO.2281/KOL/2017 NAVNEET AGARWAL VS. ITO 20. 07.2018 8 ITA NO.456 OF 2007 BOMBAY HIGH COURT CIT VS. SHRI MUKESH RATILAL MAROLIA 07.09.2011 9 ITA NO.95 OF 2017 (O&M) PCIT VS. PREM PAL GANDHI 18.01.2018 10 ITA NO.1089/KOL/2018 SANJAY MEHTA 28.09.2018 4 ITA NOS.824 & 2085/KOL/2018 SANTI RANJAN DAS & M. K. KANDOI & SONS, HUF A.YRS. 2012-13 & 2015-16 4 6. REGARDING THE CASE LAWS RELIED UPON BY THE LD. D EPARTMENTAL REPRESENTATIVE, I FIND THAT, IN THE CASE OF M/S. PANKAJ AGARWAL & SON S (HUF)(SUPRA), THE ISSUE WAS DECIDED AGAINST THE ASSESSEE FOR THE REASON THAT, T HE ASSESSEE COULD NOT JUSTIFY HIS CLAIM AS GENUINE BY PRODUCING EVIDENCE AND WAS ONLY ARGUI NG FOR THE MATTER TO BE SET ASIDE TO THE LOWER AUTHORITIES ON THE GROUND OF NATURAL JUST ICE. AS SIMILAR ARGUMENTS WERE NOT RAISED BEFORE THE LOWER AUTHORITIES BY THE ASSESSEE , THE ITAT REJECTED THESE ARGUMENTS. IN THE CASE ON HAND, ALL EVIDENCES WERE PRODUCED BY THE ASSESSEE. IN THE CASE OF SANJAY BIMALCHAND JAIN, LEGAL HEIR OF SANTI DEVI BIMALCHAN D JAIN, THE HONBLE HIGH COURT UPHELD THE STAND OF THE REVENUE THAT THE TRANSACTIO N IN QUESTION IS AN ADVENTURE IN NATURE OF TRADE AND THE PROFIT OF THE TRANSACTIONS IS ASSESSABLE UNDER THE HEAD OF BUSINESS INCOME. IN THE CASE ON HAND, THE LD. ASS ESSING OFFICER HAS NOT ASSESSED THIS AMOUNT AS BUSINESS INCOME. IN ANY EVENT, I AM BOU ND TO FOLLOW THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THIS MATTER. I FIND TH AT THE ASSESSEE HAS FILED ALL NECESSARY EVIDENCES IN SUPPORT OF THE TRANSACTIONS. SOME OF T HESE EVIDENCES ARE (A) EVIDENCE OF PURCHASE OF SHARES, (B) EVIDENCE OF PAYMENT FOR PUR CHASE OF SHARES MADE BY WAY OF ACCOUNT PAYEE CHEQUE, COPY OF BANK STATEMENTS, (C) COPY OF BALANCE SHEET DISCLOSING INVESTMENTS, (D) COPY OF DEMAT STATEMENT REFLECTING PURCHASE, (E) COPY OF MERGER ORDER PASSED BY THE HIGH COURT , (F) COPY OF ALLOTMENT OF SHARES ON MERGER, (G) EVIDENCE OF SALE OF SHARES THROUGH THE STOCK EXCHANGE, (H) COPY OF DEMAT STATEMENT SHOWING THE SALE OF SHARES, (I) COPY OF BANK STATEMENT REFLECTING SA LE RECEIPTS, (J) COPY OF BROKERS LEDGER, (K) COPY OF CONTRACT NOTES ETC. 7. THE PROPOSITION OF LAW LAID DOWN IN THESE CASE L AWS BY THE JURISDICTIONAL HIGH COURT AS WELL AS BY THE ITAT KOLKATA ON THESE ISSUE S ARE IN FAVOUR OF THE ASSESSEE. THESE ARE SQUARELY APPLICABLE TO THE FACTS OF THE C ASE. THE LD. DEPARTMENTAL REPRESENTATIVE, THOUGH NOT LEAVING HIS GROUND, COUL D NOT CONTROVERT THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN QUESTION IS COVERED BY THE ABOVE CITED DECISIONS OF THE HONBLE JURISDICTIONAL CALCUTTA HI GH COURT AND THE ITAT. I AM BOUND TO FOLLOW THE SAME. 8. IN VIEW OF THE ABOVE DISCUSSION I DELETE THE AD DITION MADE U/S 68 OF THE ACT, ON ACCOUNT OF LONG TERM CAPITAL GAINS. 4. MR. SINGH SUBMITS THAT THIS FORMER ASSESSEE SH RI SANTI RANJAN DAS HAD BEEN ALLOWED TO CROSS-EXAMINE THE BROKER WHO FAILED TO SUPPORT H IS CASE DURING THE COURSE OF ASSESSMENT. I FIND NO MERIT IN REVENUES INSTANT AR GUMENT AS THIS BROKERS STATEMENT FORMING PART OF CASE RECORD NOWHERE ALLEGED THE ASS ESSEE TO HAVE INDULGED IN ANY CASH TRANSACTION OR LONG TERM CAPITAL GAINS ENTRIES. I A CCORDINGLY ADOPT THE LEARNED CO- ORDINATE BENCHS ABOVE EXTRACTED DETAILED DISCUSSI ON TO DELETE THE IMPUGNED ADDITION 5 ITA NOS.824 & 2085/KOL/2018 SANTI RANJAN DAS & M. K. KANDOI & SONS, HUF A.YRS. 2012-13 & 2015-16 5 COMMISSION DISALLOWANCE; IF ANY, MADE QUA THE SAID ADDITION COMPONENT WOULD ALSO FOLLOW THE SUIT AS A NECESSARY COROLLARY. 5. NO OTHER ARGUMENT HAS BEEN RAISED BEFORE ME. 6. THESE TWO ASSESSEES APPEALS ARE ALLOWED IN ABO VE TERMS. ORDER PRONOUNCED IN THE COURT ON 22.03.2019 SD/- [ S.S.GODARA ] JUDICIAL MEMBER DATED : 22.03.2019 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. I) SANTI RANJAN DAS, 24, TUSTA BABU ROAD, P.O. K ANCHARAPARA, NORTH 24 PARGANAS, PIN-743145, II) M.K. KANDOI & SONS, HUF, ROOM NO. 6/11, 4 TH FLOOR, 6, CLIVE ROW, CLIVE ROW BACK PORTION, DALHOUSIE, KOLKATA-700001. 2. I) DCIT, CIRCLE-51, KOLKATA II) ITO, WARD-35(4), KOLKATA 3..C.I.T(A).- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT , KOLKATA BENCHES