DCIT CIR 15(1), MUMBAI V. PINAKIN L SHAH, MUMBAI

ITA 2247/MUM/2011

• Counselvise Citation: 224719914 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 18-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rectification of order
• Section: 68; 154; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI B.R.MITTAL,(JM) AND RAJENDRA (AM) . . , , ./I.T.A. NO. 2247/MUM/2011 ( / ASSESSMENT YEAR:2005-06) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -15(1), ROOM NO.104, 1SR FLOOR,MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 / VS. SHRI PINAKIN L. SHAH, 59, KIKA STREET, GULALWADI, MUMBAI-400004 ( & / APPELLANT) .. ( ' & / RESPONDENT) ./ ./PAN/GIR NO. : AACPS7747Q & / APPELLANT BY : SHRI PRADEEP KUMAR SINGH ' & * /RESPONDENT : SHRI S.C.TIWARI AND MS.NATASHA MANGAT * - / DATE OF HEARING : 22.8.2013 * - /DATE OF PRONOUNCEMENT : 28.8.2013 / O R D E R PER B.R.MITTAL, JM: THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2005-06 AGAINST ORDER DATED 10.1.2011 OF LD CIT(A)-XXVI, MUMBAI ON THE F OLLOWING GROUNDS : '1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A O ON ACCOUNT OF SHARE TRADING INSTEAD OF L. T. C. G. AS CLAIMED BY THE AS SESSEE, WITHOUT APPRECIATING THE FACTS THAT ALL THESE SHARE TRANSACTIONS WERE NO T ELIGIBLE FOR EXEMPTION U/ S 10(38) OF THE I. T. ACT, 1961 AS THE L. T. C. G. HA S ARISEN ON SUCH SHARE TRANSACTIONS WHICH ARE NOT CHARGEABLE TO S. T. T. B EING OFF MARKET TRANSACTIONS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION MA DE TOWARDS LONG TERM CAPITAL GAIN OF RS.2,18,24,011/- IN ORDER PASSED U/S154 OF THE INCOME TAX ACT,1961. WITHOUT APPRECIATING THE FACT THAT NO EVIDENCE REGA RDING PAYMENT OF STT ON THESE SHARE TRANSACTIONS WAS PRODUCED BY THE ASSESS EE BEFORE THE A.O. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ISSUE IS D EBATABLE, AND FALLS OUT OF PURVIEW OF SECTION 154 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE I.T.A. NO. 2247/MUM/2011 2 FACT THAT THE ISSUES IS VERY MUCH WITHIN THE PURVIE W OF SECTION 154 AS THE MISTAKE IS APPARENT FROM RECORDS AND ALSO THERE IS NO MATERIAL ON RECORD TO PROVE THAT STT WAS PAID ON THE TRANSACTIONS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW , THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AO WAS NOT COMPETE NT TO AMEND THE ASSESSMENT ORDER U/S 154 OF I. T. ACT ON AN ISSUE W HICH HAS BEEN ADJUDICATED UPON BY THE HON'BLE APPELLATE TRIBUNAL WITHOUT APPR ECIATING THE FACT THAT THE ISSUE ADJUDICATED UPON BY THE HON'BLE APPELLATE TRI BUNAL WAS DIFFERENT FROM THE ISSUE ON WHICH ORDER U/S 154 HAS BEEN PASSED BY AO. 2. RELEVANT FACTS GIVING RISE TO THIS APPEAL ARE TH AT THIS APPEAL IS ARISING OUT OF ORDER DATED 12.2.2010 PASSED BY AO U/S 154 OF THE INCOME TAX ACT, 1961 (THE ACT) VIDE WHICH HE MADE ADDITION TOWARDS LONG TERM CAPITAL G AINS (LTCG) OF RS.2,18,24,011/- ON THE GROUND THAT NO STT WAS PAID BY THE ASSESSEE . IT IS RELEVANT TO STATE THAT AO ORIGINALLY MADE ASSESSMENT U/S 143(3) OF THE ACT O N 31.12.2007 AND TREATED LTCG SHOWN BY ASSESSEE AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE FIRST APPELLATE AUTHORITY VIDE ORDER DATED 14.3.2008 DELETED THE SAID ADDITION AND HELD THAT LTCG BE TREATED AS GENUINE. IT IS OBSERVED THAT THE DEPARTMENT PREFERRED APPEAL BEFOR E THE TRIBUNAL AGAINST THE SAID ORDER OF LD. CIT(A) BEING ITA NO.3030/MUM/2008 AND THE TRIBUNAL VIDE ORDER DATED 14.7.2009 DISMISSED THE APPEAL OF THE DEPARTMENT BY CONFIRMING THE ORDER OF LD. CIT(A). IT IS OBSERVED THAT AO WHILE GIVING EFFECT TO THE O RDER OF CIT(A) ISSUED NOTICE U/S 154 OF THE ACT DATED 30.7.2009 STATING AS UNDER : 'AS PER PROVISIONS OF SECTION 10(36) AS WELL AS 10( 38) OF THE I. T. ACT, 1961 THE LONG TERM CAPITAL GAIN ON SALE OF SHARES ARE EXEMPT ONLY WHEN THE TRANSACTION OF SHARE HAS BEEN MADE THROUGH STOCK EXCHANGE AND SUCH TRANSACTION ARE CHARGEABLE TO SECURITIES TRANSACTION TAX UNDER CHAP TER VII OF THE FINANCE (2) ACT 2004 AND CERTIFICATE IN FORM NO 10(DB) SHOULD B E FURNISHED ALONGWITH RETURN OF INCOME DULY VERIFIED. IN YOUR CASE, SINCE THE TRANSACTIONS ARE OFF TRADE I.E. THE TRANSACTION HAS NOT BEEN MADE THROUGH STOCK EXC HANGE AND THEREFORE STT IS NOT CHARGEABLE AND NO CERTIFICATE IN FORM NO 10DB HAS BEEN FURNISHED ALONGWITH RETURN OF INCOME. HENCE LONG TERM CAPITAL GAIN IS C HARGEABLE TO TAX. THE SALE PRICE OF THE SHARES IS RS.2,21,36,097=93 AND A SPEC IAL RATE OF TAX HAS TO BE LEVIED.' AO AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE STATED THAT THE TRANSACTIONS IN RESPECT OF WHICH ASSESSEES CLAIM OF EXEMPTION O F LTCG WERE OFF TRADE AND THEREFORE, IT CANNOT BE TREATED AS EXEMPTED LTCG AS CLAIMED BY THE ASSESSEE. AO ALSO STATED THAT THE ISSUE OF EXEMPTION OF LTCG WAS NEITHER BEFORE LD. CIT(A) NOR BEFORE ITAT AND THEREFORE WHILE PASSING ORDER U/S 154 OF THE ACT, T HERE WAS NO QUESTION OF REVISING THE ORDER OF SUPERIOR AUTHORITIES. THAT THE APPELLATE AUTHORITIES HAVE HELD THAT IT IS A LTCG I.T.A. NO. 2247/MUM/2011 3 AND NOT CASH CREDIT AS HELD BY AO IN ASSESSMENT OR DER. AO STATED THAT THERE IS AN APPARENT MISTAKE FROM THE RECORD AND NEEDS RECTIFI CATION U/S 154 OF THE ACT. ACCORDINGLY, AO DISALLOWED THE CLAIM OF THE ASSESSE E AND ADDED A SUM OF RS.2,18,24,011/- TO THE TOTAL INCOME OF ASSESSEE. B EING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED THA T AO HAS WRONGLY MADE ADDITION U/S 154 OF THE ACT AS THERE IS NO MISTAKE APPARENT FROM THE RECORD AND ALL THE ASPECTS OF THE ISSUE HAVE ALREADY BEEN CONSIDERED BY THE THEN AO, LD. CIT(A) AS WELL AS BY THE TRIBUNAL. AO WHILE GIVING EFFECT TO THE ORDER OF LD. CIT(A) DATED 14.3.2008 HAS CONFUSED HIMSELF AND HAS WRONGLY MADE ADDITION BY EXERCISING POWER U/S 154 OF THE ACT. IT WAS ALSO CONTENDED THAT THE ASSESSEE FILED THE FOLLOWING DETAILS INTERALIA: I) COPIES OF THE CONTRACT NOTES OF SALE OF SHARES, II) STATEMENT SHOWING DETAILS OF SALE OF SHARES OF TALENT INFOWAYS LIMITED III) COPIES OF BILLS OF SALES OF SHARES FROM THE BROKER IV) COPIES OF LEDGER ACCOUNT IN THE BOOKS OF M.S MA HASAGAR SECURITIES PRIVATE LIMITED V) CONFIRMATION STATEMENT FROM MAHASAGAR SECURITI ES PRIVATE LIMITED SHOWING BILL NO., DATE AND NO. OF SHARES AND AMOUNT OF SALES PROCEEDS VI) DETAILS PAYMENT RECEIVED, SHOWING DATE , CHEQU E NO. AMOUNT, BANK DETAILS ETC VII) CERTIFICATE FROM THE BROKER FOR RECEIPT OF TH E SHARES VIII) COPIES OF BANK STATEMENT OF THE BROKER REA LIZATION OF CHEQUES IX) COPIES OF OUR BANK ACCOUNT SHOWING RECEIPT OF AMOUNT FROM THE BROKER 4. ASSESSEE CONTENDED BEFORE LD. CIT(A) THAT IT CA N BE OBSERVED FROM THE ABOVE DOCUMENTS THAT THE ASSESSEE HAD MADE PAYMENT OF SE CURITIES TRANSACTIONS TAX (STT). THE STT WAS DULY CHARGED ON EACH BILL ISSUED BY TH E BROKER AND AS SUCH SAID TAX HAD DULY BEEN PAID AT THE TIME OF PURCHASE AND DULY BEE N DEDUCTED FROM THE SALE PROCEEDS AT THE TIME OF THE SALE. THE CONTRACT NOTES ENC LOSED ALSO INDICATES THE TRANSACTIONS DETAILS. IT WAS CONTENDED THAT THE CONTENTION OF T HE AO THAT STT HAS NOT BEEN PAID TO THE AO IS NOT CORRECT. FURTHER, FORM NO.10DB IS R EQUIRED TO BE SUBMITTED ONLY WHEN THE ASSESSEE CLAIMS DEDUCTION U/S 88E. IT WAS ALSO CON TENDED THAT THE DEPARTMENT ALSO PREFERRED APPEAL AGAINST THE ORDER OF ITAT DATED 1 4.7.2009 BEFORE THE HONBLE HIGH COURT. LD. CIT(A) AFTER CONSIDERING THE ABOVE SUBM ISSIONS QUASHED THE ORDER OF AO VIDE PARA 3 OF THE IMPUGNED ORDER AND DIRECTED TO DEL ETE THE ADDITION MADE BY AO U/S 154 OF THE ACT. THE SAID PARA IS REPRODUCED AS UNDE R : I HAVE CONSIDERED THE RIVAL SUBMISSION OF THE APP ELLANT AND FINDING OF THE AO, CAREFULLY. I FIND THAT LD. AO HAS WRONGLY EXERCISED THE POWER U/S 154 IN RESPECT OF THE ISSUE WHICH IS DEBATABLE IN NATURE OR NEEDS FURTHER INVESTIGATION OR SCRUTINY OF THE RECORDS. NO ORDER U/S 154 CAN BE PASSED RECTIFYING ANY SUCH ISSUE, WHICH IS NOT APPARENT MISTAKE FROM THE RECOR DS AND NEEDS FURTHER I.T.A. NO. 2247/MUM/2011 4 DECISION, SCRUTINY, VERIFICATION OR INVESTIGATION. IT IS VERY EVIDENT THAT AFTER GIVING APPEAL EFFECT BY THE THEN ASSESSING OFFICER, SUBSEQ UENTLY, LD. ASSESSING OFFICER HAS SUOMOTO STARTED THE PROCEEDINGS U/S. 154 FOR RE CTIFICATION OF APPEAL EFFECT ORDER OR ASSESSMENT ORDER WHICH IS HAVING NO APPARE NT MISTAKE FROM THE RECORD BUT HAVING ISSUE NEEDS FURTHER INVESTIGATION OR SCR UTINY. CONTRARY TO THE PRESUMPTION OF THE LD. AO, LD. AR HAS SUBMITTED THE EVIDENCE OF PAYMENT OF SECURITIES TRANSACTION TAX. AS PER THE PROCEDURE, S UCH STT IS DULY CHARGED ON EACH BILL ISSUED BY THE BROKER THEREFORE, STT HAS A LREADY BEEN PAID BY THE APPELLANT AT THE TIME OF TRANSACTIONS ITSELF. THIS FACT IS VISIBLE FROM THE CONTRACT NOTES THEREFORE, THE FINDING OF THE ASSESSING OFFIC ER THAT STT IS NOT PAID IS FACTUALLY WRONG. FURTHER, I FIND FORCE IN THE CONTE NTION OF THE AR THAT FORM NO. 10DB IS REQUIRED TO BE SUBMITTED ONLY WHEN THE ASSE SSEE CLAIMS DEDUCTION U/S. 88E. IT IS ALSO WORTHWHILE TO MENTION THAT THE PROV ISION OF LAW U/S. 154 IS VERY CLEAR THAT MISTAKE APPARENT FROM RECORD SHOULD BE G LARING ONE, FREE FROM DEBATE AND ALTERNATE ARGUMENT WHEREAS THE ISSUE UNDER REFE RENCE IS NOT FREE FROM DEBATE OR NOT FREE FROM ALTERNATIVE ARGUMENTS. IT T RANSPIRES FROM RECTIFICATORY ORDER THAT THERE IS A RECTIFICATION OF ERROR OF JUD GEMENT, HENCE IT CANNOT BE RECTIFIED U/S. 154 VIDE INDIAN IRON AND STEEL CO. L TD. VS. STO (1973) 32 STC 95 (ALL) AND CIT VS. RAMESH ELECTRIC & TRADING CO. (19 93) 203 ITR 497, 502 (BORN). IN THE CASE OF CIT VS. SUMAN TEA & PLYWOOD INDUSTRI ES P. LTD. (1997) 226 ITR 35 HON'BLE CALCUTTA HIGH COURT HAS GIVEN A PROPOSIT ION THAT MISTAKE SHOULD BE CLERICAL, GRAMMATICAL, ARITHMETICAL OR ALIKE NATURE WHICH COULD BE DETECTED WITHOUT REARGUMENT OR REAPPRAISAL OF FACTS. BUT, IN THIS CASE, NO SUCH MISTAKE IS THERE HENCE, THE RECTIFICATORY ORDER OF THE ASSESSI NG OFFICER IS NOT AS PER THE LAW OR PROVISION U/S. 154 OF THE LT. ACT. THEREFORE, TH E ORDER PASSED U/S. 154 OF THE LT. ACT DATED 12.02.2010 IS HEREBY QUASHED AND ASSE SSING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE TOWARDS LONG TERM CAPITAL GAIN OF RS. 2,18,24,011/- IN RECTIFICATORY ORDER AND REDUCE THE ASSESSMENT. HENCE THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBU NAL. 5. AT THE TIME OF HEARING LD. DR RELIED ON THE ORDE R OF AO. ON THE OTHER HAND, LD. AR JUSTIFIED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT ASSESSEE PAID STT TO THE BROKER AS PER BILLS RAISED BY THE BROKER AND REFERRED PAGE S 2 TO 29 OF THE PAPER BOOK TO SUBSTANTIATE HIS SUBMISSIONS. HE SUBMITTED THAT THE ASSESSEE IS REQUIRED TO PAY STT ONLY TO THE BROKER AS PER BILLS RAISED AND THE COP Y OF THE SAID BILLS INDICATING PAYMENTS OF STT WERE FILED BEFORE AO. HE FURTHER SUBMITTE D THAT THE AO HAS STATED A NEW GROUND BY ISSUING NOTICE U/S 154 OF THE ACT WHILE G IVING EFFECT TO THE ORDER OF THE LD. CIT(A) BY ISSUING NOTICE U/S 154 OF THE ACT THOU GH TRIBUNAL HAD ALREADY CONFIRMED THE ORDER OF THE LD. CIT(A) VIDE ORDER DATED 14.7. 2009. HE SUBMITTED THAT THERE IS NO PRIMA FACIE MISTAKE WHICH CAN BE RECTIFIED U/S 154 OF THE ACT. AO HAS RAISED A NEW GROUND WHICH IS DEBATABLE AND AS SUCH IS OUTSIDE T HE PURVIEW OF THE PROVISIONS OF SECTION 154 OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF AUTHORITIES BELOW. WE A GREE WITH THE LD. CIT(A) THAT THE AO I.T.A. NO. 2247/MUM/2011 5 HAS WRONGLY EXERCISED THE POWERS BY ISSUING NOTICE U/S 154 OF THE ACT IN RESPECT OF THE ISSUE WHICH IS DEBATABLE IN NATURE AND NEEDS FURTH ER INVESTIGATION OR SCRUTINY OF RECORDS. WE ALSO OBSERVE FROM THE COPIES OF THE BI LLS PLACED AT PAGES 2 TO 29 OF THE PAPER BOOK THAT IN THE BILLS ISSUED BY THE BROKER, STT WAS DULY CHARGED. THEREFORE, THE ASSESSEE HAS PAID STT AT THE TIME OF TRANSACTIONS TO THE BROKER. THE FINDINGS OF THE AO THAT NO STT WAS PAID IS NOT APPARENT MISTAKE AND IS NOT BASED ON ANY MATERIAL ON RECORD. WE ALSO AGREE WITH THE LD. CIT(A) THAT THE CONTENTION OF THE ASSESSEE THAT FORM NO.10DB IS REQUIRED TO BE SUBMITTED ONLY WHEN ASSES SEE CLAIMS DEDUCTION U/S 88E OF THE ACT HAS MERITS. THEREFORE, PRESUMPTION OF THE AO TO ISSUE NOTICE U/S 154 OF THE ACT THAT THERE IS AN APPARENT MISTAKE FROM RECORD IS N OT FACTUALLY CORRECT AND IT REQUIRES EXAMINATION OF RECORDS. HENCE, WE AGREE WITH THE LD. CIT(A) THAT THE RECTIFICATION ORDER PASSED BY AO IS NOT AS PER LAW AND THEREFORE PROV ISIONS OF SECTION 154 OF THE ACT IS NOT APPLICABLE. ACCORDINGLY, WE UPHOLD THE ORDER O F LD. CIT(A) BY REJECTING THE GROUND(S) OF APPEAL TAKEN BY THE DEPARTMENT. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH AUG, 2013 * SD/- SD/- ( /RAJENDRA ) ( . . /B.R.MITTAL) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3 DATED 28 / 08/2013 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. & / THE APPELLANT 2. ' & / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- CONCERNED 4. 4 / CIT CONCERNED 5. 5 '7 , - 7 , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) - 7 , /ITAT, MUMBAI