I.T.O.-1(3), Agra V. Sh. Rakesh Khetrapal, Agra

ITA 226/AGR/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0270 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Share purchase agreement; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 226/AGRA/2010 ASSTT. YEAR : 2002-03 INCOME-TAX OFFICER, VS. SHRI RAKESH KHETRAPAL, 1(3), AGRA. 22-SURYA NAGAR, AGRA. (PAN : AHSPK 3672 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. DATE OF HEARING : 09.01.2013 DATE OF PRONOUNCEMENT OF ORDER : 18.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, AGRA DATED 29.03.2010 FOR THE ASSESSMENT YEAR 2002- 03, CHALLENGING THE DELETION OF ADDITION OF RS.10,78,043/- MADE ON ACCOUNT OF LO NG-TERM CAPITAL GAINS ON SALE OF SHARES. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE PURCHASED THE SHARES OF M/S. CAPITAL TRADE LINKS LTD. ON 01.02.2000 DIRECTL Y FROM THE COMPANY AND SHARES WERE ACCORDINGLY ALLOTTED TO THE ASSESSEE AT THE RA TE OF RS.10/- PER SHARE. COPIES OF THE ALLOTMENT OF SHARE CERTIFICATES AND ALLOTMENT A DVICE ARE FILED IN THE PAPER BOOK ITA NO. 226/AGRA/2010 2 AT PAGES 33 TO 63. THUS, THE SHARES WERE PURCHASED IN PRECEDING ASSESSMENT YEAR. THE ASSESSEE, THEREFORE, CLAIMED THAT THE SHARE TRA NSACTIONS ENTERED INTO BY THE ASSESSEE ARE COMPLETELY GENUINE. THE ASSESSEE HAS S OLD 6000 SHARES OF M/S. CAPITAL TRADE LINKS LTD. ON 03.04.2001 AT THE RATE OF RS.99 /- PER SHARE FOR A TOTAL SALE CONSIDERATION OF RS.5,94,000/- AND RS.5,91,240/- AN D BROKERAGE WAS DEDUCTED AND REMAINING AMOUNT WAS REMITTED THROUGH ACCOUNT PAYEE CHEQUES, WHICH WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. IT W AS CLAIMED THAT THE SHARES HAVE BEEN SOLD THROUGH BROKERS, M/S. H.B. RELAN & CO. AN D M/S. M.K.M. FINSEC (P) LTD. WHO WERE THE MEMBERS OF DELHI STOCK EXCHANGE A SSOCIATION LTD. COPIES OF THE SAME ARE FILED IN THE PAPER BOOK AT PAGE 64 TO 67 AND IT WAS CLAIMED THAT ASSESSEE FILED COPY OF THE ALLOTMENT ADVICE OF M/S. CAPITAL TRADE LINK LTD. FOR ALLOTMENT OF SHARES, CONTRACT NOTES OF BOTH THE BRO KERS FOR SALE OF THE SHARES AND QUOTATIONS FROM M.P. STOCK EXCHANGE WAS ALSO FILED TO PROVE GENUINE RATES OF SHARES SOLD AT RS.99/- PER SHARE. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT SAME IS NOT GENUINE TRAN SACTIONS OF SALE OF SHARES AND MADE ADDITION OF RS.10,78,043/- U/S. 68 OF THE IT A CT. THE SAME ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND ASSESSEE REITE RATED THE SAME SUBMISSIONS AND SUBMITTED THAT THE ASSESSEE MADE GENUINE PURCHASE O F THE SHARES AND ALSO GENUINELY SOLD THE SHARES THROUGH BROKERS AND ALL S ALE CONSIDERATION HAVE BEEN RECEIVED FROM THE BANKING CHANNEL AND THE ASSESSEE VOLUNTARILY DISCLOSED LONG- TERM CAPITAL GAINS IN THE RETURN OF INCOME. THEREFO RE, THE ADDITION IS UNJUSTIFIED. ITA NO. 226/AGRA/2010 3 THE LD. CIT(A) DIRECTED THE ADDL. DIT (INV.), AGRA AND THE ASSESSING OFFICER TO PRODUCE ALL THE RELEVANT MATERIAL/EVIDENCE BEFORE H IM ON THE BASIS OF WHICH ADDITION HAS BEEN MADE. THE LD. CIT(A), HOWEVER, NO TED THAT DESPITE HIS DIRECTIONS NO MATERIAL IS PRODUCED BEFORE HIM TO SHOW THAT THE ASSESSEE ENTERED INTO ANY BOGUS TRANSACTION. THE LD. CIT(A), THEREFORE, FOUND THAT THERE WAS NO ADVERSE MATERIAL AGAINST THE ASSESSEE TO SHOW THAT THE ASSE SSEE RECEIVED ACCOMMODATION ENTRIES OR ENTERED INTO BOGUS TRANSACTION AND ACCOR DING, THE ADDITION WAS DELETED. 3. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ALSO REFERRED TO THE DOCUMENTS OF PURCHAS E AND SALE AND QUOTATIONS FROM M.P. STOCK EXCHANGE TO PROVE THAT THE ASSESSEE ENTE RED INTO TRANSACTIONS GENUINELY AND ALSO SUBMITTED THAT NO EVIDENCE WAS BROUGHT AGA INST THE ASSESSEE THAT THE ASSESSEE ENTERED INTO BOGUS TRANSACTIONS AND NO MAT ERIAL COLLECTED AT THE BACK OF THE ASSESSEE WAS CONFRONTED TO THE ASSESSEE. HE HAS SUBMITTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VISHAL HOLDING & CAPITAL (P) LTD. IN ITA NO. 1031/2010 VIDE ORDER DATED 09.08.2010 DISMISSED THE DEPARTMENTAL APPEAL, IN WHICH SIMILAR TRANSACTIONS WERE CONDUCTED WITH THE BROKERS M/S. MKM FINSEC PVT. LTD. COPY OF THE ORDER IS FILED IN THE PAPER BOOK. HE HAS ALSO RELIED UPON THE ORDERS OF THE ITAT, AGRA BENCH IN THE CASE OF SHRI BAIJNAT H AGARWAL VS. ACIT IN ITA ITA NO. 226/AGRA/2010 4 NO. 133 OF 2005 AND ITO VS. AJAY PRAKASH HUF IN ITA NO. 74 OF 2010. COPIES OF THE SAME ARE FILED IN THE PAPER BOOK. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE FACTS OF THE CASE OF THE ASSESSEE ARE SIMILAR TO TH AT OF DEPARTMENTAL APPEAL IN THE CASE OF RAM PRAKASH GARG IN ITA NO. 237/2011 FOR TH E ASSESSMENT YEAR 2001-02, IN WHICH ITAT, AGRA BENCH DISMISSED THE DEPARTMENTA L APPEAL VIDE ORDER OF THE EVEN DATE, HOLDING AS UNDER : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N. THE AO, ON THE FACTS OF THE CASE FOUND THAT SIMILAR ISSUE HAVE BEE N CONSIDERED IN THE CASE OF HUF OF ASSESSEE AND OTHER FAMILY MEMBERS SH RI RAJESH KUMAR GARG AND SMT. SEEMA GARG WHO HAVE ALSO SHOWN LONG-TERM CAPITAL GAINS OF THE SIMILAR NATURE OF THE SAME BRO KER AND OF THE SAME SCRIP IN THE ASSESSMENT YEAR UNDER APPEAL, WHICH WE RE FOUND TO BE BOGUS BY THE AO AND ADDITIONS HAVE BEEN CONFIRMED B Y THE LD. CIT(A) AS WELL. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE FILED COPY OF THE TRIBUNAL ORDER IN THEIR CASES DATED 31.03.2009 IN W HICH THE ITAT, AGRA BENCH DELETED THE SIMILAR ADDITIONS AND NO REL IANCE WAS PLACED ON THE STATEMENT OF SHRI MUKESH GUPTA AND HIS WIFE. THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE ALLAHABA D HIGH COURT VIDE ORDER DATED 15.02.2011. IN THE AFORESAID DECIS ION, IT WAS FOUND THAT THOSE ASSESSEES HAD OBTAINED SHARES IN PREFERE NTIAL ALLOTMENT DIRECTLY FROM THE COMPANIES AND THE PURCHASES DECLA RED IN THE BALANCE SHEET OF EARLIER YEARS, WHICH WERE ACCEPTED BY THE DEPARTMENT. SHARES WERE SOLD TO THE REGISTERED STOC K BROKERS AND STOCK EXCHANGE. BROKERS HAVE CONFIRMED THAT MONEY W AS GIVEN THROUGH DRAFT. HONBLE ALLAHABAD HIGH COURT, THEREF ORE, ON CONSIDERATION OF THESE RELEVANT CONSIDERATIONS, CON FIRMED THE FINDINGS OF THE TRIBUNAL THAT THE SALES ARE NOT SHAM TRANSAC TIONS. ACCORDING TO THE AO, THE FACTS OF THESE CASES ARE IDENTICAL TO T HE CASE OF THE ASSESSEE, THEREFORE, WHEN IN THE IDENTICAL CASES OF THE FAMILY MEMBERS ITA NO. 226/AGRA/2010 5 OF THE ASSESSEE, ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAVE BEEN CONFIRMED BY ALLAHA BAD HIGH COURT, THEREFORE, ON SUCH REASON ITSELF, THE DEPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. FURTHER, THE ASSESSEE HAS FILED PROPE R EVIDENCES BEFORE THE AUTHORITIES BELOW TO SHOW THAT SHARES OF M/S. B .T. TECHNET LTD. WERE ALLOTTED DIRECTLY BY THIS COMPANY @ 10/- PER S HARE AND CONSIDERATION WAS TRANSFERRED THROUGH BANKING CHANN EL. ALL THE ALLOTMENT LETTERS, DRAFTS, CERTIFICATES OF THE COMP ANY ARE FILED IN THE PAPER BOO;. THE PROFILE OF M/S. B.T. TECHNET IS ALS O FILED IN THE PAPER BOOK TO SHOW THAT IT WAS A GENUINE COMPANY. THE SAM E WERE SHOWN IN THE BOOKS OF EARLIER YEARS. THEREFORE, THE PURCHASE OF SHARES AND SOURCE OF PURCHASE COULD NOT HAVE BEEN DISPUTED. SA ME SHARES WERE SOLD TO THE BROKER, M/S. CMS SECURITIES LTD. DELHI AND ALL THE CONTRACT NOTES, SALE CONSIDERATION THROUGH DRAFTS HAVE BEEN FILED IN THE PAPER BOOK TO SUPPORT THE CONTENTION OF THE ASSESSEE. THE SALE RATE OF RS.114/- PER SHARE IS ALSO SUPPORTED BY THE INFORMA TION RECEIVED FROM M.P. STOCK EXCHANGE. WHATEVER STATEMENTS OF CMS SEC URITIES LTD. THROUGH THEIR DIRECTORS WERE RECORDED WERE NEVER CO NFRONTED TO THE ASSESSEE. THEREFORE, THE SAME CANNOT BE READ IN EVI DENCE, WHICH IS ALSO SUBSTANTIATED BY THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF KISHAN CHAND CHELARAM VS. CIT, 125 ITR 713. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, IN THE LIG HT OF THE DECISION OF THE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE GROU P CASES ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE ASSESSEE ON TH E BASIS OF EVIDENCE AND MATERIAL ON RECORD HAS BEEN ABLE TO PROVE THAT HE HAS RECEIVED ENTIRE SALE CONSIDERATION OF SHARES THROUGH KNOWN S OURCES. THEREFORE, NO ADDITION U/S. 68 COULD BE MADE AGAINST THE ASSES SEE. AS A RESULT, THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 4.1 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE ORDER OF THE TRIBUNAL AND OTHER DECISIONS REFERRED BY THE LD. COUNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS LI ABLE TO BE DISMISSED. THE ASSESSEE PURCHASED SHARES OF M/S. CAPITAL TRADE LIN KS LTD. IN EARLIER YEARS DIRECTLY FROM THE COMPANY AND CONSIDERATION RECEIVED IS PROV ED AND THE PURCHASES MADE IN ITA NO. 226/AGRA/2010 6 EARLIER YEAR HAVE NOT BEEN DISPUTED BY THE REVENUE AUTHORITIES. THE ASSESSEE SOLD SHARES THROUGH TWO BROKERS AND THEIR COPIES OF SALE BILLS AND CONTRACT NOTES ARE FILED AND SALE CONSIDERATION OF SHARE IS GIVEN TO THE ASS ESSEE THROUGH BANKING CHANNEL AND THE RATES AT WHICH THE SHARES ARE TRANSFERRED A RE SIMILAR AS APPROVED BY M.P. STOCK EXCHANGE. THE LD. CIT(A) ASKED THE INCOME-TAX AUTHORITIES TO PRODUCE ALL RELEVANT EVIDENCES AND MATERIAL BEFORE HIM TO PROVE THAT THE ASSESSEE HAS ACCEPTED BOGUS ACCOMMODATION ENTRY, BUT NO MATERIAL WAS PROD UCED BEFORE HIM IN THIS REGARD. THEREFORE, THE LD. CIT(A) ON PROPER APPRECI ATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. FURTHER, WHATE VER MATERIAL WAS COLLECTED AT THE BACK OF THE ASSESSEE WAS NOT FORWARDED TO THE ASSES SEE. THEREFORE, SAME CANNOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. SINCE, IT IS DEPARTMENTAL APPEAL AND NO MATERIAL IS PRODUCED BEFORE US TO REBUT THE FINDING S OF THE LD. CIT(A), THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. IN THE RESULT, THE DEPARTMENTAL APPEA L FAILS AND IS DISMISSED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- ITA NO. 226/AGRA/2010 7 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY