Sh. Vinod Kumar Katyal Prop., Agra V. I.T.O.-1(3), Agra

ITA 231/AGR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2153 (ITAT-AGRA)
• Duration Of Justice: 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 25-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Share purchase agreement; Sham transactions
• Section: 54F; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 231AG./ 2013 ASSESSMENT YEAR 2003-04 SHRI VINOD KUMAR KATYAL VS. ITO-I(3), PROP. M/S KATYAL SHOE FACTORY AGRA SHOE MARKET HIND KI MANDI, AGRA. (PAN ABHPK 5730 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 15.07.2013 DATE OF PRONOUNCEMENT : 19.07.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-I, AGRA DATED 01.04.2013 FOR THE A.Y.2003-04. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED LONG-TER M CAPITAL GAIN OF RS.12,85,016/- AGAINST WHICH THE ASSESSEE HAS CLAIMED EXEMPTION UN DER SECTION 54F OF THE ACT. IT WAS NOTICED THAT IN A.Y. 2001-02, THE ASSESSEE PURC HASES 10,000 SHARES FOR ITA NO.231/AG./2013 A.Y.2003-4 2 RS.1,00,000/- OF M/S SRINIVAS LEASING & FINANCE LTD . AND 3000 SHARES FOR RS.30,000/- OF M/S SURYA UDYOG LTD.. THE SAID SHAR ES WERE SOLD DURING THE YEAR UNDER CONSIDERATION FOR RS.14,21,424/-. THE A.O. NO TICED THAT ASSESSEE HAS FAILED TO FURNISH RELEVANT EVIDENCE AND DOCUMENTS IN SUPPORT OF GENUINENESS OF THOSE SHARES TRANSACTIONS. SINCE THE ASSESSEE HAS FAILED TO PROV E THE GENUINENESS OF SALES OF SHARES, THE A.O. MADE ADDITION OF RS.14,30,000/-. T HE CIT(A) CONFIRMED THE ADDITION HOLDING THAT SHARE TRANSACTION SHOWN BY TH E ASSESSEE IS NON-GENUINE. 3. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS, DOCUMENTS AND EVIDENCES, EXPLANATION ETC. BEFORE THE REVENUE AUTHORITIES. THE LD. AUTHORIZED REPRESENTAT IVE SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE SHARES OF M/S SRINIVAS L EASING & FINANCE LTD. THE ORIGINAL SHARE CERTIFICATE ALONG WITH VOUCHERS RECE IVED BY THE BROKERS IN RESPECT OF SALE AND PURCHASE OF THE SHARES WERE FILED. THE LD . AUTHORIZED REPRESENTATIVE SUBMITTED THAT UNFORTUNATELY ON ACCOUNT OF FEAR AND PANIC IN THIS FIELD THE BROKERS THROUGH WHOM THE SALES AND PURCHASE WERE CONDUCTED BY THE ASSESSEE ARE NOT CO- OPERATING BEING THE ASSESSEE HAS NO CONTROL NEITHER ANY PRESSURE NOR HAS RELATION REMAINED WITH HIM. IN THE FACTS AND CIRCUMSTANCES, DOCUMENTS REQUIRED BY THE REVENUE AUTHORITIES COULD NOT BE OBTAINED AND FURNI SHED. THE LD. AUTHORIZED ITA NO.231/AG./2013 A.Y.2003-4 3 REPRESENTATIVE SUBMITTED THAT UNDER THE CIRCUMSTANC ES, IT WAS REQUESTED TO THE A.O. TO ISSUE SUMMONS UNDER SECTION 131 OF THE ACT ON COST OF THE ASSESSEE TO THE CONCERNED PERSONS TO WHOM THE A.O. WANT TO OBTAIN D OCUMENTS FROM HIM BECAUSE WHATSOEVER DOCUMENTS BEING REQUIRED BY THE DEPARTME NT OR BEING ISSUED BY THE BROKERS, ARE GIVEN TO THE A.O. THE LD. AUTHORIZED R EPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE NECESSARY EVIDENCE TO SU PPORT THE FACT THAT COMPANY OF WHOM THE SHARES WERE PURCHASED IS EXISTING COMPANY AND THOSE SHARES WERE DULY QUOTED IN THE STOCK EXCHANGE. THE LD. AUTHORIZED RE PRESENTATIVE SUBMITTED THAT THE SHARES WERE SOLD AND DELIVERY HAS BEEN GIVEN. T HE ASSESSEE VIDE REPLY DATED 02.03.2006 REQUESTED A.O. TO SUMMON THE CONCERNED P ERSONS UNDER SECTION 131 OF THE INCOME TAX ACT, AT THE ASSESSEES COST. THE LD. AUTHORIZED REPRESENTATIVE DREW OUR ATTENTION AT PAGE NO.4 WHERE THE CIT(A) HAS REP RODUCED THE ASSESSEES CONTENTION. THE LD. AUTHORIZED REPRESENTATIVE POINT ED OUT THAT BEFORE THE CIT(A) IT HAS BEEN CLEARLY SUBMITTED THAT THE ASSESSEE HAS FU RNISHED ALL THE RELEVANT DETAILS, WHICH HAS BEEN NOTED BY THE CIT(A) IN HIS ORDER PAG E NO.5 ONWARDS. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ON IDENTIC AL SETS OF FACTS THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE LD. AUT HORIZED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON VARIOUS DECIS IONS OF THE TRIBUNAL, WHICH ARE AS UNDER:- ITA NO.231/AG./2013 A.Y.2003-4 4 1. ITA NO. 237/AGRA/2011 IN THE CASE OF ACIT VS. SH RI RAM PRAKASH GARG, AGRA, ORDER DATED 18.01.2013. 2. ITA NO.226/AGRA/2010 IN THE CASE OF ITO VS. SHRI RAKESH KHETRAPAL, ORDER DATED 18.01.2013. 3. ITA NO.273/AGRA/204 IN THE CASE OF SMT. SUNITA O BEROI VS. ITO, ORDER DATED 07.08.2009. 4. ITA NOS.101/AGR/2005 & 92/AGR/2005 IN THE CASE O F ITO VS. SMT. BIBI RANI BANSAL, ORDER DATED 09.02.2010. 5. ITA NO.133/AGR/2005 IN THE CASE OF SHRI BAIJNATH AGARWAL VS. ACIT, AGRA, ORDER DATED 13.04.2010. 6. ITA NO.201/AGR/2007 IN THE CASE OF SMT. JAYA BHA TIA VS. ITO, FIROZABAD, ORDER DATED 30.05.2008. 7. ITA NO. 353/AGR/2007 IN THE CASE OF KM. SAUMYA A GARWAL VS. ITO, MATHURA, ORDER DATED . 8. ITA NO.473/AGR/2009 & OTHERS IN THE CASE OF ITO VS. SMT. JAGJEET KAUR, AGRA, ORDER DATED 17.09.2010. 4. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASS ESSEE BY VARIOUS DECISIONS INCLUDING THE ORDERS OF THE ITAT, AGRA BENCH, AGRA. THE RELEVANT FINDINGS OF THE ITAT, AGRA BENCH, AGRA IN THE CASE OF ACIT VS. RAM PRAKASH GARG IN ITA NO. 237/AGRA/2011 VIDE ORDER DATED 18.01.2013 IS REPROD UCED AS BELOW :- 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND REFERRED TO PB-100 AND 101, WHICH IS THE REPLY FILED BEFORE THE AO ALO NG WITH THE EVIDENCE IN ITA NO.231/AG./2013 A.Y.2003-4 5 WHICH IT WAS EXPLAINED THAT THE SHARES OF M/S. B.T. TECHNET LTD. WERE DIRECTLY ALLOTTED TO THE ASSESSEE IN THE OFFERING T O THE PUBLIC ON 07.09.1999 AND SHARES WERE DIRECTLY ALLOTTED TO THE ASSESSEE A T RS.10/- EACH. COPIES OF THE SHARE CERTIFICATES, LETTER OF THE COMPANY AND P AYMENT PROOF WERE FILED FROM PAGES 10 TO 27. THE SHARES WERE ACQUIRED IN TH E EARLIER YEARS WHICH HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNT AND HAVE NO T BEEN DOUBTED. THE SAME SHARES WERE SOLD IN THE ASSESSMENT YEAR UNDER APPEAL TO THE BROKER M/S. CMS SECURITIES LTD. DELHI @ 114/- EACH SHARE F OR A TOTAL CONSIDERATION OF RS.15,87,050/-. COPIES OF TRANSFER DEED, CONTRACT NOTES AND PAYMENTS WERE RECEIVED THROUGH DRAFTS ARE FILED IN THE PAPER BOOK AT PAGES 40 TO 50. PB-93 IS THE INFORMATION RECEIVED F ROM M.P. STOCK EXCHANGE REGARDING SALE VALUE OF SHARES OF B.T. TEC HNET LTD. AT RS.114/- EACH SHARE. HE HAS SUBMITTED THAT THE SOURCE OF PUR CHASE OF SHARES AND SOURCE OF SALE CONSIDERATION HAVE NOT BEEN DISPUTED BY THE AUTHORITIES BELOW AND IN THE CASES OF RAJESH GARG, RAM PRAKASH GARG, HUF AND SEEMA GARG, THE TRIBUNAL DELETED SIMILAR ADDITION I N RESPECT OF SHARES SOLD THROUGH THE SAME BROKER. COPY OF THE ORDER OF THE TRIBUNAL DATED 31.03.2009 IS FILED IN THE PAPER BOOK AND THE SAID DECISION OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT VS. RAJESH KUMAR GARG IN ITA NO. 323 OF 2009 VI DE ORDER DATED 15.02.2011 AND COPY OF ORDER OF HIGH COURT IS FILED AT PAGE 29 OF THE PAPER BOOK. HE HAS CONTENDED THAT ALL THE ENQUIRIES CONDUCTED AT THE BACK OF THE ASSESSEE AND STATEMENT OF SHRI MUKESH GUPTA AND HIS WIFE, THE DIRECTORS OF M/S. CMS SECURITIES LTD. WERE NEVER SU PPLIED TO THE ASSESSEE. THE ACTION OF THE AO HAS BEEN CRITICIZED BY THE TRI BUNAL IN THE CASE OF RAJESH GARG (SUPRA) AND NO RELIANCE HAS BEEN PLACE D ON THE SAME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFE RE WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE AO, ON THE FACTS OF THE CASE FOUND THAT SIMILAR ISSUE HAVE BEEN CONSIDERED IN THE CASE OF HUF OF ASSESSEE AND OTHER FAMILY MEMBERS SHRI RAJESH KUMAR GARG AND SMT. SEEMA GARG WHO HAVE ALSO SHOWN LONG-TERM CAPITAL GAINS OF THE SIMILAR NATURE OF THE SAME BROKER AND OF THE SAME SCRIP IN THE ASSESSMENT YEAR UNDER APPEAL, WHICH WERE FOUND TO BE BOGUS BY THE AO AND ADDITION S HAVE BEEN CONFIRMED BY THE LD. CIT(A) AS WELL. HOWEVER, THE L D. COUNSEL FOR THE ASSESSEE FILED COPY OF THE TRIBUNAL ORDER IN THEIR CASES DATED 31.03.2009 IN WHICH THE ITAT, AGRA BENCH DELETED THE SIMILAR A DDITIONS AND NO RELIANCE WAS PLACED ON THE STATEMENT OF SHRI MUKESH GUPTA AND HIS WIFE. ITA NO.231/AG./2013 A.Y.2003-4 6 THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATED 15.02.2011. IN THE AFOR ESAID DECISION, IT WAS FOUND THAT THOSE ASSESSEES HAD OBTAINED SHARES IN P REFERENTIAL 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 STOCK BROKERS AND STOCK EXCHANGE. BROKERS HAVE CONFIRMED THAT MONEY WAS GIVEN THROUGH DRAFT. HONBLE ALLAHABAD HIGH COURT, THEREFORE, ON CONSIDERATION OF THESE RE LEVANT CONSIDERATIONS, CONFIRMED THE FINDINGS OF THE TRIBUNAL THAT THE SAL ES ARE NOT SHAM TRANSACTIONS. ACCORDING TO THE AO, THE FACTS OF THE SE CASES ARE IDENTICAL TO THE CASE OF THE ASSESSEE, THEREFORE, WHEN IN THE ID ENTICAL CASES OF THE FAMILY MEMBERS OF THE ASSESSEE, ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAVE BEEN CO NFIRMED BY ALLAHABAD HIGH COURT, THEREFORE, ON SUCH REASON ITSELF, THE D EPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. FURTHER, THE ASSESSEE HAS F ILED PROPER 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 CHANNEL. ALL THE AL LOTMENT LETTERS, DRAFTS, CERTIFICATES OF THE COMPANY ARE FILED IN THE PAPER BOO;. THE PROFILE OF M/S. B.T. TECHNET IS ALSO FILED IN THE PAPER BOOK TO SHO W THAT IT WAS A GENUINE COMPANY. THE SAME WERE SHOWN IN THE BOOKS OF EARLIE R YEARS. THEREFORE, THE PURCHASE OF SHARES AND SOURCE OF PURCHASE COULD NOT HAVE BEEN DISPUTED. SAME SHARES WERE SOLD TO THE BROKER, M/S. CMS SECURITIES LTD. DELHI AND ALL THE CONTRACT NOTES, SALE CONSIDERATIO N THROUGH DRAFTS HAVE BEEN FILED IN THE PAPER BOOK TO SUPPORT THE CONTENT ION OF THE ASSESSEE. THE SALE RATE OF RS.114/- PER SHARE IS ALSO SUPPORTED B Y THE INFORMATION RECEIVED FROM M.P. STOCK EXCHANGE. WHATEVER STATEME NTS OF CMS SECURITIES LTD. THROUGH THEIR DIRECTORS WERE RECORD ED WERE NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, THE SAME CAN NOT BE READ IN EVIDENCE, WHICH IS ALSO SUBSTANTIATED BY THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF KISHAN CHAND CHELARAM VS. CIT, 125 ITR 713. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES , IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE GROUP CASES ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFER E 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 H AS RECEIVED ENTIRE SALE CONSIDERATION OF SHARES THROUGH KNOWN SOURCES. THER EFORE, NO ADDITION ITA NO.231/AG./2013 A.Y.2003-4 7 U/S. 68 COULD BE MADE AGAINST THE ASSESSEE. AS A RE SULT, THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 5. THE LD. D.R. RELIED UPON THE ORDER OF THE CIT(A ). 6. SINCE THE FACTS ARE IDENTICAL. THE ASSESSEE HAS DISCHARGED THE BURDEN THAT THE TRANSACTIONS WERE GENUINE. WE FOLLOW THE ABOVE ORDE RS OF THE ITAT. ORDERS OF THE REVENUE AUTHORITIES ARE SET ASIDE AND ADDITION OF R S.14,30,000/- MADE BY THE A.O. IS DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY