Smt. Hansaben H. Patel, Ankleshwar V. The Income Tax Officer, Ward-4, Bharuch

ITA 2240/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5866 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-04-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Assessee Lawyers: J P SHAH
• Keywords: Reopening of assessment; Unexplained investment; Capital asset; Charitable institution; Audit objection; Question of law; Reason to believe
• Section: 143(3); 80G; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.2240/AHD/2014 (ASSESSMENT YEAR:2007-08) HANSABEN H. PATEL 01, RAVIDARSHAN SOCIETY, G.I.D.C., ANKALESHWAR - 393002 APPELLANT VS. ITO, WARD-4, BHARUCH RESPONDENT PAN: ADZPP8635L /BY ASSESSEE : SHRI J. P. SHAH, A.R. /BY REVENUE : SHRI OM PRAKASH MEENA, SR. D.R. /DATE OF HEARING : 28.04.2017 /DATE OF PRONOUNCEMENT : 19.05.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 EMANATES AGAINST THE CIT(A)-V, BARODAS ORDER DATED 12.05.2014, PASS ED IN CASE NO. CAB/(A)V/179/13-14 , IN PROCEEDINGS U/S. 143(3) R.W .S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 2 - 2. THE ASSESSEE PLEADS THE FOLLOWING SUBSTANTIVE GR OUNDS: 1) THE ORDER PASSED U/S 250 ON 12/05/2014 FOR A.Y . 2007-08 BY CIT(A) -V, BARODA, CONFIRMING THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE I.T.ACT,1961 BY AO AND MAKING THE ADDITION U/S 69 O F THE ACT IS WHOLLY ILLEGAL AND UNLAWFUL. 2) (I) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE. LEARNED AO HAD NO REASO N TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT PAR TICULARLY AFTER HAVING RECEIVED THE APPELLANT'S REPLY IN RESPONSE T O LETTER DT. 06-06- 2011 AS REGARDS TO AUDIT QUERY. (II) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT THE LEARNED AO HAD NOT DISPO SED OFF THE OBJECTIONS FILED BY THE APPELLANT BY PASSING A SPEA KING ORDER AND THEREBY NOT FOLLOWING THE PRINCIPLES; SET ON BY HON 'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V /S INCOME-TAX OFFICER [2003] 259 ITR 19 (SC); AS REGARDS TO NOTIC E ISSUED U/S148 OF I.T.ACT,1961. (III) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED I N LAW AND ON FACTS IN CONFIRMING THE REASSESSMENT ORDER U/S 147 ON THE BA SIS OF THE AUDIT NOTE RAISED BY THE AUDIT PARTY. (IV) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN RECONSIDERING THE ASSESSMENT IN THE CASE OF PROCEED INGS U/S 147 OF THE ACT. [CIT V/S SUN ENGINEERING WORKS (P) LTD. 19 8 ITR 297 (SC)] 3) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND ON FACTS IN DISALLOWING TIE APPELLANT'S CLAIM OF EXEMPTION OF RS.13,40,369 U/S 10(38). 4) (I) THE LEARNED CIT(A) HAS GRIEVOUSLY ERR ED IN LAW AND ON FACTS IN TREATING THE SALE PROCEEDS OF EQUITY SHARES OF RS. 13,40,369 AS UNEXPLAINED INVESTMENT U/S 69 OF INCOME TAX ACT, 19 61. (II) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN IGNORING THE FACT THAT 7900 EQUITY SHARES OF TALENT INFOWAY LTD WERE PURCHASED ON 13-04-2004 FOR RS.12,023 AND 6000 EQUITY SHARES WERE PURCHASED ON 13-04-2005 FOR RS.7,631.; IS AN OLD INVESTMENT WHICH HAS BEEN SHOWN IN THE BALANCE SHEE T AND HAS BEEN ACCEPTED BY AO. IN RESPECT OF SALE OF ABOVE RE FERRED 13900 SHARES SALE PROCEEDS OF RS. 13,40,369 WERE RECEIVED . (III) THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LA W AND ON FACTS IN TREATING SALE PROCEEDS OF RS.13,40,369 AS UNEXPLAIN ED INVESTMENT ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 3 - EVENTHOUGH THE INVESTMENT IN SHARES IS ACCEPTED BY ASSESSING OFFICER. 3. WE COME TO RELEVANT FACTS PERTAINING TO ASSESSEE S LEGAL GROUND AS WELL AS HER PLEADINGS ON MERIT CHALLENGING SECTION 69 AD DITION OF RS.13,40,369/-. SHE FILED HER RETURN ON 09.01.2008 DECLARING INCOME OF RS.2,12,580/-. THE SAME STOOD PROCESSED ON 16.01.2009. THE ASSESSING OFFICER THEREAFTER COMPLETED REGULAR ASSESSMENT ON 23.11.2009 DISALLOW ING/ADDING INTEREST NOT CHARGED ON ADVANCES AMOUNTING TO RS.41,100/-. 4. WE PROCEED FURTHER TO NOTICE THAT THE ASSESSING OFFICER THEREAFTER FOUND REASONS TO BELIEVE OF THE ASSESSEES TAXABLE INCOME READING AS UNDER: ON VERIFICATION OF CASE RECORDS, IT WAS NOTICED TH AT THE ASSESSEE HAD PURCHASED 36,100 SHARES OF TALENT INFOWAY LTD, FOR RS.54,455/ - ON VARIOUS DATES THROUGH SHARE BROKER. OUT OF THE ABOVE, THE ASSESSEE HAD SO LD OUT 13,900/- SHARES DURING THE FINANCIAL YEAR 2006-07 IN TWO LOTS I.E. 7900 SH ARES FOR RS.7,50,976/- ON 19.07.2006 AND 6000 SHARES FOR RS.5,89,393/- ON 22. 03.2007 THROUGH OFF MARKET TRANSACTIONS. THE ASSESSEE HAD CLAIMED EXEMPTION OF LTCG OF RS.13 ,20,685/- U/S 10(38) OF THE I.T.ACT. THE ABOVE SAID TRANSACTION W AS OFF MARKET TRANSACTION WHICH WAS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/S 10(38) OF THE ACT. IN VIEW OF THE ABOVE, THE AO HAD REASONS TO BELIEVE THAT THE INCOME CHARG EALE TO TAX HAS ESCAPED ASSESSMENT TO THE EXTENT OF RS. 13,20, 685/- FOR TH E YEAR UNDER CONSIDERATION. THE ASSESSMENT WAS REOPENED U/S 147 OF THE I.T ACT BY R ECORDING REASON FOR REOPENING, AND ACCORDINGLY NOTICES U/S 148 OF THE IT ACT WAS I SSUED ON 15.3.2011 AND DULY SERVED UPON THE ASSESSEE'. 5. THE ASSESSING OFFICER ACCORDINGLY ISSUED SECTION 148 NOTICE DATED 15.03.2011. HE THEN COMPLETED RE-ASSESSMENT IN QUE STION ON 30.11.2012 ADDING THE ABOVESTATED AMOUNT OF RS.13,20,685/- IN RESPECT OF ASSESSEES PROFIT ON SALE OF SHARES. ALL THIS RESULTED IN IMP UGNED LONG TERM CAPITAL GAINS ADDITION. 6. THE ASSESSEE PREFERRED APPEAL CHALLENGING VALIDI TY OF REOPENING AS WELL AS THE ABOVE LONG TERM CAPITAL GAINS ADDITION ON ME RITS. THE CIT(A) REJECTS ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 4 - BOTH THESE PLEAS IN LOWER APPELLATE ORDER UNDER CHA LLENGE. HIS FINDINGS ON THE FORMER ISSUE READ AS UNDER: 5.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND THE REASONS RECORDED BY THE AO. I AM NOT IN AGREEMENT WITH THE APPELLANT THAT THE ASSESSMENT WAS REOPENED DUE TO AUDIT OBJECTION AND THAT THE AO WAS CONVINCED WITH THE EXPLANATION OF THE APPELLANT. THE AUDIT PARTY MAY H AVE POINTED OUT THE MISTAKE TO THE ASSESSING OFFICER BY RAISING AN AUDIT OBJECTION BUT THE MISTAKE POINTED OUT IS A MISTAKE OF FACTS AND NOT THAT OF LAW. THEREFORE, AU DIT OBJECTION CONSTITUTES AN INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFF ICER CONCLUDED THAT AN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. SHARES IN RESPECT OF TRANSACTIONS DONE ON RECOGNIZED STOCK EXCHANGE ARE NOT TRANSFERRED BY WRITING MODE OF TRANSACTION AS 'OFF MARKET. IN VIEW OF THIS, THE AO HAD REASO NS TO BELIEVE THAT LONG TERM CAPITAL GAINS EARNED BY THE APPELLANT WERE NOT EXEM PT U/S 10(38)OF THE IT ACT BECAUSE UNDERLINE SHARES WERE TRANSFERRED IN AN OFF MARKET DEAL. WHETHER THE AO HAD SUFFICIENT MATERIAL TO FORM THIS BELIEF CANNOT BE CALLED IN QUESTION, EXISTENCE OF SOME MATERIAL TO FORM A PRIMA FACIE BELIEF IS SUFFI CIENT. THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKER PV T LTD (2007), 291 ITR 500 HAS HELD THAT 'IF A.O. HAS CAUSE OR JUSTIFICATION TO KN OW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON T O BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ T O MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. AT THE STAGE, THE FINAL OUTCOME OF THE PROCEEDINGS IS NOT RELEVANT. I N OTHER WORDS, AT THE INITIAL STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. IT HAS ALSO BEEN HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S PVS BEEDIES PVT.LTD.237 ITR 13 THAT THE ASSESSMENT REOPENED ON THE BASIS OF FACTUAL MISTAKE POINTED OUT BY THE AUDIT PARTY IS V ALID IN LAW. THE HEAD NOTE OF THE DECISION IS REPRODUCED HEREUNDER: SECTION 147(B) OF THE INCOME-TAX ACT, 1961 - REASSE SSMENT - INFORMATION - ASSESSMENT YEARS 1974-75 AND 1975-76 - ASSESSING OF FICER ALLOWED DEDUCTION UNDER SECTION 80G ON DONATION GIVEN TO A CHARITABLE TRUST - AUDIT PARTY GAVE A FACTUAL INFORMATION THAT RECOGNITION OF SAID TRUST HAD EXPIRED BEFORE 1-4-1973 AND, HENCE, DEDUCTION UNDER SECTION 80G WOULD NOT B E ALLOWABLE - ASSESSING OFFICER, THEREFORE, REOPENED ASSESSMENT - TRIBUNAL AND HIGH COURT HELD THAT REOPENING OF ASSESSMENT UNDER SECTION 147(B) WAS NO T PERMISSIBLE ON BASIS OF REPORT GIVEN BY AUDIT DEPARTMENT - WHETHER AUDIT PA RTY HAD MERELY POINTED OUT A FACT WHICH HAD BEEN OVERLOOKED BY ASSESSING OFFIC ER AND THIS WAS NOT A CASE OF INFORMATION ON A QUESTION OF LAW -HELD, YES - WHETH ER REOPENING OF CASE UNDER SECTION 147(B) ON BASIS OF FACTUAL INFORMATION GIVE N BY INTERNAL AUDIT PARTY WAS VALID IN LAW - HELD, YES IN VIEW OF THESE FACTS AND THE POSITION OF LAW, I A M OF THE OPINION THAT THE AO HAD VALIDLY REOPENED THE ASSESSMENT U/S 147 OF THE IT A CT. THIS GROUND OF APPEAL IS THEREFORE, DISMISSED. ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 5 - 7. WE FURTHER NOTICE THAT THE CIT(A) THEREAFTER TAK ES NOTICE OF ASSESSEES CONCESSION MADE IN COURSE OF LOWER APPELLATE PROCEE DINGS TO TREAT THE ABOVE SHARE INCOME AS UNEXPLAINED INVESTMENTS U/S.69 OF T HE ACT AS FOLLOWS: 6. THE THIRD GROUND OF APPEAL IS DIRECTED AGAINST THE ADDITION OF RS.13,20,685/- MADE BY THE AO TOWARDS LONG TERM CAP ITAL GAIN. WHILE MAKING THIS ADDITION THE AO OBSERVED AS UNDER: DURING COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SEE WAS SERVED WITH A SHOW CAUSE VIDE THIS OFFICE LETTER NO.BCH/WD.4/147/ SHOWCAUSE /HHP/2012-13 DATED 18.09.2012. IN RESPONSE TO THE S AME, THE ASSESSEE VIDE HER LETTER DATED 21.11.2012 FURNISHED A REPLY WHICH READ AS UNDER: 'WE REFER TO YOUR NOTICE ON ABOVE SUBJECT AS WELL A S YOUR NOTICE U/S 148 . IN THE MATTER, WE SUBMIT THAT OUR ORIGINAL RETURN E FI LED ON 09.01.20108 SHALL BE CONSIDERED AS RETURN U/S 148 OF THE ACT,. WITHOUT PREJUDICE TO ABOVE, WE SUBMIT THAT YOU HAVE CLAIMED ON VERIFICATION OF THE RECORDS THAT WE HAVE PURCHASED 36100 SHARES OF TALENT INFOWAY LTD, FOR RS.54,455/- ON VARIOUS DATES THROU GH SHARE BROKER M/S TALENT INFOWAY LTD.. OUT OF ABOVE, WE HAVE SOLD 239 00 SHARES DURING THE F.Y.2006-07 THROUGH SAME BROKER THROUGH OFF MARKET TRANSACTIONS. YOU HAVE ALSO POINTED OUT THAT THESE TRANSACTIONS ARE N OT ELIGIBLE FOR CLAIMING EXEMPTION U/S 10(38) OF THE I.T. ACT 1961 AS THE EL EMENT OF PAYING STT IS NOT BEING INVOLVED AT ALL. IN OUR CASE WE MAY DRAW YOUR ATTENTION THAT IN OUR CASE THE BROKER IS M/S ALLIANCE LNTERMEDIATERIES AND NETWORK PVT LTD. AND NOT M/S TALENT INFOWAY LTD.. AS CLAIMED BY YOU. WE HAVK PAID STT TO THE SA ID BROKER AS PER CERTIFICATE ATTACHED. WE MAY FURTHER INFORM YOU THA T OUR SALE TRANSACTION IS ENTERED INTO THROUGH ICSE STOCK EXCHANGE ( INTER CO NNECTED STOCK EXCHANGE OF INDIA LTD) AS PER THE ABOVE SAID CERTIF ICATE WHICH IS A RECOGNIZED STOCK EXCHANGE AS PER ENCLOSED NOTIFICAT ION. IN VIEW OF THE ABOVE, YOU ARE REQUESTED TO TREAT OU R TRANSACTION OF ITCG COVERED U/S 10(38) OF THE I. T.ACT, 1961'. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE ASSESSEE. THE ASSESSEE FAILED TO FURNISH DETAILS AND EVIDENCES WH ICH PROVES THAT THE SHARE TRANSACTIONS ARE DONE THROUGH A RECOGNIZED STOCK EX CHANGE WITH PROPER PAYMENT OF SECURITY TRANSACTION TAX AS REQUIRED BY THE SEBI REGULATIONS AND AS SUCH ELIGIBLE FOR CLAIMING EXEMPTION U/S 10( 38) OF THE I.T. ACT FROM LONG TERM CAPITAL GAINS. ALL THAT THE ASSESSEE COUL D FURNISH IS A COPY OF THE SO CALLED CONFIRMATION FROM ALLIANCE INTERMEDIATERI ES AND NETWORK PVT LTD., MUMBAI WITHOUT ANY PROPER ATTESTATION AND DET AILS LIKE PAN NUMBER OF THE STOCK BROKER. ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 6 - DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD SOLD 13,900 SHARES OF TALENT INFOWAY LTD. THROUGH STOCK BROKER FOR RS.13,40,369/ - THROUGH OFF MARKET DEALINGS. 7900 SHARES WERE SOLD OUT ON 19.072006 FOR A CONSID ERATION OF RS.7,50,976/- AND 6000 SHARES WERE SOLD OUT ON 22.03.2007 FOR A CONSI DERATION OF RS.5,89,393/-. IT WAS NOTICED THAT 36,100 SHARES OF TALENT INFOWAY LT D. WERE PURCHASED BY THE ASSESSEE AT A TOTAL COST OF RS.54,455/- ON DIFFEREN T DATES. THE TOTAL PROFIT (LTCG) OF RS.13,20,685/- WAS CLAIMED BY THE ASSESSEE AS EXEMP T U/S10(38) OF THE I.T. ACT. SHRI J.P. SHAH, CA CONTENDED DURING THE COURSE OF H EARING THAT THE TRANSACTIONS WERE MADE THROUGH ICSE ( INTER CONNECTED STOCK EXCH ANGE OF INDIA LTD), HOWEVER, HE FAILED TO PROVE THE SAME WITH SUPPORTING PROOF A ND EVIDENCES. THE AR OF THE ASSESSEE, VIDE ORDER SHEET ENTRY DATED 21.11.2012 W AS ASKED TO FURNISH COPIES OF CONTRACT NOTES AND PROOF AND EVIDENCE OF PAYMENT OF SECURITY TRANSACTION TAX IN RESPECT OF THE SHARE TRANSACTIONS MADE BY THE ASSES SEE. HOWEVER, THE ASSESSEE FAILED TO SUBSTANTIATE THAT SHE HAD PAID SECURITY T RANSACTION TAX ON THE ABOVE SAID TRANSACTIONS. SECTION 10(38) OF THE I.T. ACT EMPHASIS THAT ' IN C OMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR OF ANY PERSON, ANY INCOME ARISING FRO M THE TRANSFER OF A LONG TERM CAPITAL ASSET, BEING AN EQUITY SHARE IN A COMPANY O R A UNIT OF AN EQUITY ORIENTED FUND WHERE : (A) THE TRANSACTION OF SALE OF SUCH EQUITY SHARE OR UNITS IS ENTERED INTO ON OR AFTER THE DATE ON WHICH CHAPTER VII OF THE FINANCE ( NO.2) ACT 2004 COMES INTO FORCE, AND (B) SUCH TRANSACTION IS CHARGEABLE TO SECURITIES TR ANSACTION TAX UNDER THAT CHAPTER:' FROM THE ABOVE, IT IS VERY CLEAR THAT FOR CLAIMING EXEMPTION U/S 10(38) OF THE I.T. ACT, PAYMENT OF SECURITY TRANSACTION TAX IS AN ESSE NTIAL PRE CONDITION. IN THE INSTANT CASE, THE ASSESSEE FAILED TO PROVE THAT THE SHARE TRANSACTIONS WERE MADE THROUGH A RECOGNIZED STOCK EXCHANGE AND ALSO THESE TRANSACTIONS WERE SUBJECTED TO PAYMENT OF SECURITY TRANSACTION TAX. THE AR OF THE ASSESSEE ORALLY STATED THAT THESE TRANSACTIONS WERE MADE THROUGH INTER CONNECTED STOC K EXCHANGE OF INDIA LTD.. HOWEVER, COULD NOT FURNISH EVIDENCES WHICH SUPPORT HIS CLAIM. IT IS NOTICED THAT THE ABOVE TRANSACTIONS WERE MADE THROUGH OFF MARKET DEALING THROUGH STOCK BROKER ALLIANCE INTERMEDIATES AND NET WORK PVT LTD.. SINCE OFF MARKET TRANSACTIONS ARE NOT SUBJECTED TO PAYMENT OF SECURITY TRANSACTION TAX, T HE PROFIT OUT OF SUCH TRANSACTIONS ARE ELIGIBLE FOR CLAIMING EXEMPTION U/ S 10(38) OF THE I.T. ACT ON THE PROFIT ON SALE OF SHARES WORKED OUT TO RS.13,20,685 /- AND AS SUCH THE ASSESSEE IS REQUIRED TO PAY TAX ON LONG TERM CAPITAL GAIN AT 20 %'. BASED ON ABOVE OBSERVATION, THE AO MADE THE ADDITIO N OF RS.13,20,685/- TO THE TOTAL INCOME. 6.1 THE AR OF THE APPELLANT VIDE WRITTEN SUBMISSION IN THE FORM OF SYNOPSIS OF ARGUMENTS, DATED 21.01.2014 STATED AS UNDER: 'IT IS SUBMITTED THAT THE ADDITION IS NOT JUSTIFIED IN VIEW OF THE FOLLOWING: ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 7 - A) WE REFER TO OUR SUBMISSIONS IN EARLIER PARA ACCO RDING TO WHICH, IN RESPONSE TO THE AUDIT OBJECTION, WE HAD EXPLAINED THAT SECURITIES TRANSACTION TAX WAS PAYABLE EVEN IN RESPECT OF OFF MARKET DELIVERY. WE ALSO FILED CERTIFICATE FROM BROKER SHOWING / PAYMENT OF SECURITIES TRANSACTION TAX IN RESPECT OF THE TRANSACTIONS UNDER CONSIDERATION. B) DURING ASSESSMENT PROCEEDINGS, APPELLANT HAD SUBMITTED VIDE LETTER DATED 21-11-2012 THAT THE TRANSACTIONS OF SA LE OF SHARES WERE DONE THROUGH BROKER, ON THE FLOOR OF RECOGNIZED STOCK EXCHANGE AND SECURITIES TRANSACTIONS TAX WAS PAID IN RESPECT / THEREOF. CONTRACT NOTES AND INVOICES WERE FILED AS SEEN FROM NOTICE DATED 18,09.2012. C) WE ENCLOSE CONTRACT NOTES SHOWING DATE AND TIME OF TRANSACTIONS ON THE STOCK EXCHANGE. D) IT IS SUBMITTED THAT THE DOCUMENTS ON RECORD SUFFICIENTLY PROVE THAT THE TRANSACTIONS WERE SUBJECT TO SECURITIES TRANSAC TION TAX AND HENCE WE REQUEST YOUR HONOUR TO DELETE THE ADDITION ON THIS GROUND. ' 6.2 AFTER GOING THROUGH THE DOCUMENTS FURNISHED BY THE APPELLANT IT WAS NOTICED THAT THE APPELLANT WAS CLAIMING THAT THE TR ANSACTIONS WERE DONE ON INTER- CONNECTED STOCK EXCHANGE OF INDIA (ICSE) AND THE SE CURITIES TRANSACTION TAX (STT) WAS PAID IN RESPECT OF THESE TRANSACTIONS. FO R VERIFICATION OF THE CLAIM OF THE APPELLANT, A LETTER WAS WRITTEN TO ICSE ASKING THEM TO CERTIFY WHETHER THE TRANSACTIONS WERE CONDUCTED THROUGH THEIR EXCHANGE AND WHETHER STT WAS PAID IN RESPECT OF THESE TRANSACTIONS. VIDE LETTER NO. 13-1 4/ISE/833/SP DATED 12.2.2014, THE EXCHANGE INFORMED AS UNDER:- ' AS PER THE RECORDS IT WAS FOUND THAT NO SUCH TRAD ES WERE EXECUTED ON ISE IN THE NAME OF HANSABEN H.PATEL FOR THE A.Y.2007-08, A LSO NOTE THAT SINCE SEPTEMBER 2003 NO TRADES WERE EXECUTED ON THE TRADI NG PLATFORM OF ISE. THEREFORE, NO SECURITIES TRANSACTION TAX WAS LEVIED '. IN VIEW OF THE INFORMATION RECEIVED FROM THE STOCK EXCHANGE, THE APPELLANT WAS ASKED VIDE LETTER DATED 20.2.2014 TO SHOW CAUSE AS TO WHY THE ENTIRE SO CALLED SALE PROCEEDS OF TALENT INFOWAY LTD. SHARES MAY NOT BE T AXED AS UNEXPLAINED MONEY IN HER HANDS. IN HIS SUBMISSION DATED 7.3.2014, THE AR OF THE APPELLANT SUBMITTED AS UNDER: 'THE CLAIM FOR EXEMPTION UNDER SECTION 10(38) WAS B ASED ON CERTIFICATE FROM THE BROKER M/S ALLIANCE INTERMEDIARIES & NET WORK PVT.L TD. TO THE EFFECT THAT THE TRANSACTION WAS DONE ON STOCK \ EXCHANGE. ACCORDI NG TO THE DOCUMENT RECEIVED BY YOUR HONOUR'S OFFICE THE TRANSACTION WAS NOT DON E ON STOCK EXCHANGE AND HENCE I HAVE NO BASIS FOR PURSUING THE GROUND RELAT ING TO THIS CLAIM. I HAVE CONSIDERED THE REPLY OF THE APPELLANT. THE A PPELLANT HAS NOT OBJECTED TO THE ACTION PROPOSED BY THE UNDERSIGNED. TOTAL SALE PROC EEDS RECEIVED BY THE APPELLANT IN RESPECT OF SO CALLED SALE OF SHARES ARE RS. 13,4 0,369/-. SINCE THE AMOUNT IS CREDITED IN THE BANK ACCOUNT OF THE APPELLANT, THE AMOUNT OF IS TAXED AS ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 8 - UNEXPLAINED INVESTMENT IN THE HANDS OF THE APPELLAN T ACCORDINGLY, ADDITION OF RS.13,20,685 MADE BY THE AO TOWARDS LONG TERM CAPIT AL GAINS IS DELETED AND AMOUNT OF RS.13,40,369/- IS TAXED IN THE HANDS OF T HE APPELLANT U/S 69 OF THE IT ACT. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT ARE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THIS LEAVES THE ASSESSEE AGGRIEVED. 8. WE HAVE HEARD BOTH PARTIES. CASE FILE PERUSED. WE FIRST OF ALL NOTICE ON MERITS THAT ASSESSEES AUTHORIZED REPRESENTATIVE FILED HER SUBMISSIONS ON 07.03.2014 BEFORE THE CIT(A) FOR NOT PROSECUTING HE R SUBSTANTIVE GROUND CHALLENGING LONG TERM CAPITAL GAINS ADDITION ON MER ITS. LEARNED CIT (A) HAS ALREADY EXTRACTED THE SAME IN ABOVE REPRODUCED FIND INGS. THE SAME GO UNREBUTTED IN THE COURSE OF HEARING BEFORE US. THE ASSESSEE FAILS IN PROVING CORRECTNESS OF HER CLAIM OF HAVING DERIVED THE PROF ITS IN QUESTION FROM SALE OF SHARES. WE THUS FIND NO REASON TO INTERFERE SO FAR AS HER GROUNDS ON MERITS ARE CONCERNED. 9. WE COME TO ASSESSEES CHALLENGE ON VALIDITY OF R EOPENING. HER CASE IS THAT THE ASSESSING OFFICER OUGHT TO HAVE DISPOSED O F HER OBJECTIONS TO REOPENING IN QUESTION. THE CASE FILE DOES NOT INDI CATE ANY SUCH RECOURSE TAKEN AT ASSESSEES BEHEST SO AS TO CHALLENGE THE R EOPENING REASONS. HER FURTHER ARGUMENT IS THAT THE IMPUGNED REOPENING IS ON ACCOUNT OF AUDIT PARTYS OBJECTION. WE REPEAT THAT LEARNED CIT(A)S FINDINGS ON MERITS HAVE GONE AGAINST THE ASSESSEE IN PROVING SOURCE OF THE MONEY IN QUESTION TO BE ARISING FROM SALE OF SHARES. WE THUS CONCLUDE THAT THE CIT(A) HAS RIGHTLY QUOTED HONBLE APEX COURTS DECISION (SUPRA) IN REJ ECTING HER CHALLENGE TO THE REOPENING IN QUESTION. WE FURTHER OBSERVE THAT THE IMPUGNED REOPENING IS WELL WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, SECTION 147 EXPLANATION 2 SQUARELY APPLIES IN FACTS OF INSTANT CASE WHEREIN THE ASSESSEE CLAIMED HER PROFITS TO BE ARISING FROM SHA RE TRANSACTIONS AS EXEMPTED ITA NO. 2240/AHD/2014 (HANSABEN H. PATEL VS. ITO) A.Y. 2007-08 - 9 - WHICH WERE FOUND TO HAVE BEEN NEVER CARRIED OUT. W E THUS DECLINE ASSESSEES CHALLENGE TO THIS LEGAL ASPECT OF THE REOPENING IN QUESTION AS WELL. 10. THIS ASSESSEES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF MAY, 2017.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 19/05/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0