A.C.I.T.-4(1), Agra V. Sh. Ram Prakash Garg, Agra

ITA 237/AGR/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0266 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 25 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: 08-01-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH AGARWAL
• Keywords: Income from undisclosed sources; Corroborative evidences; 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. 237/AGRA/2011 ASSTT. YEAR : 2001-02 A.C.I.T., 4(1), VS. SHRI RAM PRAKASH GARG, AGRA. C-25, KAMLA NAGAR, AGRA. (PAN : ACHPG 7828 B) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI MAHESH AGARWAL, C.A. DATE OF HEARING : 08.01.2013 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)-II, DEHRADUN (CAMP AGRA) DATED 01.03.2011 FOR THE ASSES SMENT YEAR 2001-02, CHALLENGING THE ORDER OF THE LD. CIT(A) IN ACCEPTIN G THE CLAIM OF THE ASSESSEE THAT HE HAD EARNED CAPITAL GAINS OF RS.15,87,050/- ON SA LE OF SHARES OF M/S. B.T. TECHNET LTD. AND HOLDING THAT THE AO HAS NOT BEEN A BLE TO PROVE THAT THE SHARE TRANSACTIONS WERE BOGUS AND FICTITIOUS. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE AO R ECEIVED INFORMATION FROM ADDL. DIT (INV.), AGRA TO THE EFFECT THAT THE ASSES SEE HAD RECEIVED ACCOMMODATION ITA NO. 237/AGRA/2011 2 ENTRIES FROM M/S. CMS SECURITIES LTD. DELHI WITH OB JECTIVE TO DECLARE UNACCOUNTED INCOME AS INCOME FROM LONG-TERM CAPITAL GAIN AND AC CORDINGLY, PROCEEDINGS U/S. 147/148 OF THE IT ACT AND THE AO IN THE ASSESSMENT ORDER HELD THAT THE ENTIRE AMOUNT OF RS.15,87,050/- RECEIVED FROM SALE OF SHAR ES WAS TREATED AS INCOME FROM UNDISCLOSED SOURCES AND ACCORDINGLY, ADDITION WAS M ADE U/S. 68 OF THE IT ACT. THE ASSESSEE DECLARED RECEIPT OF AN AMOUNT OF RS.15,87, 050/- ON SALE OF 14000 SHARES OF M/S. B.T. TECHNET LTD. ON WHICH LONG-TERM CAPITA L GAIN OF RS.14,47,050/- WAS WORKED OUT AFTER DEDUCTION OF THE COST OF SHARES OF RS.1,40,000/-. LONG TERM CAPITALS WERE CLAIMED AS EXEMPT U/S. 54EC STATING T HAT THE ENTIRE AMOUNT OF SALE HAD BEEN INVESTED IN NABARAD BONDS. THE SHARES WERE CLAIMED AS SOLD THROUGH BROKER, M/S. CMS SECURITIES LTD., DELHI. THE AO ASK ED THE ASSESSEE TO PRODUCE BROKER TO EXAMINE THE GENUINENESS OF THE SALE TRANS ACTION AND THE PURCHASE OF SHARES AS WELL TO VERIFY THE IDENTITY AND CREDITWOR THINESS OF THE PURCHASER OF THE SHARES. THE ASSESSEE WAS REQUIRED TO PRODUCE THE CO PY OF BANK ACCOUNT FROM WHICH DEMAND DRAFTS FOR THE AMOUNT OF SALE OF SHARES WERE ISSUED. THE AO NOTED THAT THE ASSESSEE NEITHER PRODUCED THE BROKER NOR THE PURCHA SER NOR HAS FILED THE COPY OF BANK ACCOUNT OF THE BROKER. THE AO, THEREFORE, NOTI CED THAT THE SOURCE OF PURCHASE OF SHARES WAS NOT SHOWN AS THE SAME DID NOT APPEAR IN THE REGULAR BOOKS OF ACCOUNT OF ASSESSEE IN FINANCIAL YEAR 1999-2000. THE ADDITI ON WAS ACCORDINGLY MADE TREATING THE SALE CONSIDERATION FROM UNDISCLOSED SO URCES. ADDITION WAS CHALLENGED ITA NO. 237/AGRA/2011 3 BEFORE THE LD. CIT(A) AND ASSESSEE REBUTTED ALL THE ALLEGATIONS OF THE AO WHICH ARE REPRODUCED AT PAGE 7 TO 10 OF THE APPELLATE ORDER I N WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE AO CONSIDERED SIMILAR ADDITION I N THE CASE OF HUF OF THE ASSESSEE AND HIS OTHER FAMILY MEMBERS, SHRI RAJESH KUMAR GARG, SMT. SEEMA GARG FOR MAKING ADDITION OF SIMILAR NATURE OF THE S AME BROKER, BUT THE ITAT, AGRA BENCH DELETED THE SAME IN THEIR CASES VIDE ORDER DA TED 31.03.2009 AND LONG-TERM CAPITAL GAINS DECLARED BY THEM HAVE BEEN FOUND TO B E GENUINE. IT WAS FURTHER EXPLAINED THAT NONE OF THESE SUPPORTING EVIDENCES P ROVIDED BY THE ASSESSEE WERE FOUND TO BE WRONG OR INCORRECT. THE ASSESSEE DECLAR ED LONG TERM CAPITAL GAINS FROM THE SALE OF SHARES WHICH WERE ALLOTTED TO THE ASSES SEE DIRECTLY AND SAME WERE SOLD TO THE BROKER. THE STATEMENTS OF SHRI MUKESH GUPTA AND HIS WIFE WHO ARE THE DIRECTORS OF M/S. CMS SECURITIES LTD. WERE RECORDED BY DDIT (INV.), WHICH IS NOT CONNECTED WITH THE ASSESSMENT PROCEEDINGS AND COPIE S OF THE SAME HAVE NOT BEEN SUPPLIED TO THE ASSESSEE. THE ASSESSEE IS NOT AWARE OF ANY INSPECTION CARRIED OUT BY THE AO IN THE OFFICE OF REGISTRAR OF COMPANIES, DEL HI. THE DETAILS OF THE ASSESSEE WERE BROUGHT ON RECORD LIKE COPIES OF SALE BILLS, C ONFIRMATION NOTES, CONTRACT NOTES ETC. TO PROVE THE GENUINENESS OF THE TRANSACTION AN D IT WAS SUBMITTED THAT THERE IS NOTHING ON RECORD TO PROVE THAT PURCHASER OF THE SH ARES WERE NOT GENUINE AND THAT THE ASSESSEE INTRODUCED OWN UNACCOUNTED MONEY IN TH E GARB OF SALE OF SHARES. NONE OF THE ENQUIRIES CONDUCTED AT THE BACK OF THE ASSESSEE WERE CONFRONTED TO THE ITA NO. 237/AGRA/2011 4 ASSESSEE. THE AO FAILED TO NOTE THAT THE SHARES WER E PURCHASED IN PRECEDING ASSESSMENT YEAR 2000-01 WHICH WERE REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.2000 AND HAVE BEEN SUBSTANTIATED WITH T HE RETURN OF INCOME. THE ASSESSEE NEVER CLAIMED PAYMENT IN CASH. SOURCE OF P AYMENT IS COPY OF BANK ACCOUNT AND DRAFTS DRAWN IN THE NAME OF COMPANY M/S . B.T. TECHNET LTD., WHICH WERE DIRECTLY ALLOTTED TO THE ASSESSEE. THE ASSESSE E FILED COPY OF THE BALANCE SHEET OF EARLIER YEAR, COPY OF BANK ACCOUNT, ALLOTMENT LE TTER, QUOTATION OF SHARES AND FUNCTIONING OF M/S. B.T. TECHNET LTD. AND COPIES OF SHARES SOLD ALONG WITH THE SALE BILLS AND CONTRACT NOTES ISSUED BY THE SHARE BROKER . IT WAS, THEREFORE, SUBMITTED THAT THE ASSESSEE ENTERED INTO TRANSACTION GENUINELY. TH E LD. CIT(A) CALLED FOR THE REMAND REPORT ON THE SUBMISSIONS OF THE ASSESSEE AN D THE ASSESSEES REBUTTAL IS ALSO NOTED IN THE APPELLATE ORDER. THE LD. CIT(A), CONSI DERING THE EVIDENCE AND MATERIAL ON RECORD AND CONSIDERING THE LARGE NUMBER OF DECIS IONS IN FAVOR OF THE ASSESSEE OF VARIOUS HIGH COURT AND THE TRIBUNAL FOUND THAT THE AO HAS NOT BEEN ABLE TO PROVE THAT SHARE TRANSACTION CLAIMED TO BE ENTERED INTO B Y THE ASSESSEE WERE BOGUS OR FICTITIOUS. THE BURDEN UPON THE ASSESSEE HAS BEEN F ULLY DISCHARGED REGARDING GENUINENESS OF THE TRANSACTION OF PURCHASER OF SHAR ES AND ACCORDINGLY, ENTIRE ADDITION WAS DELETED AND THE APPEAL OF THE ASSESSEE WAS ALLOWED. ITA NO. 237/AGRA/2011 5 3. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE BOGUS COMPANY PROVIDED ACCOMMODATION ENTRIES TO THE ASSES SEE, SOURCE OF WHICH IS NOT EXPLAINED. THE AO INSPECTED THE RECORD OF ROC, DELH I AND FOUND THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE BROKER WER E NOT VERIFIABLE. GIST OF STATEMENT OF SHRI MUKESH GUPTA & HIS WIFE WERE GIVE N TO THE ASSESSEE. NOTICE SENT TO M/S. B.T. TECHNET LTD. RETURNED UN-SERVED. THERE FORE, IT WAS NON-EXISTING COMPANY AND TRANSACTIONS HAVE NOT BEEN CONFIRMED BY THE BROKER. THEREFORE, THE LD. CIT(A) SHOULD NOT HAVE DELETED THE ADDITION. TH E LD. DR RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS AND FINLEASE PVT. LTD., 18 TAXMAN.COM, 217. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO P B-100 AND 101, WHICH IS THE REPLY FILED BEFORE THE AO ALONG WITH THE EVIDENCE I N WHICH IT WAS EXPLAINED THAT THE SHARES OF M/S. B.T. TECHNET LTD. WERE DIRECTLY ALLOTTED TO THE ASSESSEE IN THE OFFERING TO THE PUBLIC ON 07.09.1999 AND SHARES WER E DIRECTLY ALLOTTED TO THE ASSESSEE AT RS.10/- EACH. COPIES OF THE SHARE CERTI FICATES, LETTER OF THE COMPANY AND PAYMENT PROOF WERE FILED FROM PAGES 10 TO 27. THE S HARES WERE ACQUIRED IN THE EARLIER YEARS WHICH HAVE BEEN SHOWN IN THE BOOKS OF ACCOUNT AND HAVE NOT BEEN DOUBTED. THE SAME SHARES WERE SOLD IN THE ASSESSMEN T YEAR UNDER APPEAL TO THE ITA NO. 237/AGRA/2011 6 BROKER M/S. CMS SECURITIES LTD. DELHI @ 114/- EACH SHARE FOR A TOTAL CONSIDERATION OF RS.15,87,050/-. COPIES OF TRANSFER DEED, CONTRAC T NOTES AND PAYMENTS WERE RECEIVED THROUGH DRAFTS ARE FILED IN THE PAPER BOOK AT PAGES 40 TO 50. PB-93 IS THE INFORMATION RECEIVED FROM M.P. STOCK EXCHANGE REGAR DING SALE VALUE OF SHARES OF B.T. TECHNET LTD. AT RS.114/- EACH SHARE. HE HAS SU BMITTED THAT THE SOURCE OF PURCHASE 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 HA S BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR GARG IN ITA NO. 323 OF 2009 VIDE ORDER DATED 15.02.2011 AND COP Y OF ORDER OF HIGH COURT IS FILED AT PAGE 29 OF THE PAPER BOOK. HE HAS CONTENDE D 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. WER E NEVER SUPPLIED TO THE ASSESSEE. THE ACTION OF THE AO HAS BEEN CRITICIZED BY THE TRIBUNAL 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 INTERFERE WITH THE OR DER OF THE LD. CIT(A) IN DELETING ITA NO. 237/AGRA/2011 7 THE ADDITION. THE AO, ON THE FACTS OF THE CASE FOUN D 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 SA ME SCRIP IN THE ASSESSMENT YEAR UNDER APPEAL, WHICH WERE FOUND TO BE BOGUS BY THE A O AND ADDITIONS 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 DAT ED 31.03.2009 IN WHICH 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 OR DER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE ALLAHABAD HIGH COURT VIDE ORDER DATED 15.02.2011. IN THE AFORESAID DECISION, IT WAS FOUND THAT THOSE ASS ESSEES HAD OBTAINED SHARES IN PREFERENTIAL ALLOTMENT DIRECTLY FROM THE COMPANIES AND THE PURCHASES DECLARED IN THE BALANCE SHEET OF EARLIER YEARS, WHICH WERE ACCE PTED BY THE DEPARTMENT. SHARES WERE SOLD TO THE REGISTERED STOCK BROKERS AND STOCK EXCHANGE. BROKERS HAVE CONFIRMED THAT MONEY WAS GIVEN THROUGH DRAFT. HONB LE ALLAHABAD HIGH COURT, THEREFORE, ON CONSIDERATION OF THESE RELEVANT CONSI DERATIONS, CONFIRMED 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 THE CASE OF T HE ASSESSEE, THEREFORE, WHEN IN THE IDENTICAL CASES OF THE FAMILY MEMBERS OF THE ASSESS EE, ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL HAVE BEEN CONFIRMED BY ALLAHABAD ITA NO. 237/AGRA/2011 8 HIGH COURT, THEREFORE, ON SUCH REASON ITSELF, THE D EPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. FURTHER, THE ASSESSEE HAS FILED PROPER E VIDENCES BEFORE THE AUTHORITIES BELOW TO SHOW THAT SHARES OF M/S. B.T. TECHNET LTD. WERE ALLOTTED DIRECTLY BY THIS COMPANY @ 10/- PER SHARE AND CONSIDERATION WAS TRAN SFERRED THROUGH BANKING CHANNEL. ALL THE ALLOTMENT LETTERS, DRAFTS, CERTIFI CATES OF THE COMPANY 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 SAME WERE SHOWN IN THE BOOKS OF EARLIER YEARS. THEREFORE, THE PURCHASE OF SHARES AND SOURCE OF PUR CHASE COULD NOT HAVE BEEN DISPUTED. SAME 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 INFORMATION RECEIVED FROM M.P. STOCK EXCHANGE. WHATEVER STATEMENTS OF CMS SECURITIES LTD. THROUGH THEIR DIRECTORS WERE RECORDED WERE NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, T HE SAME CANNOT 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 DEC ISION OF THE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE GROUP CASES ABOVE, WE D O NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DELET ING THE ADDITION. THE ASSESSEE ON THE BASIS OF EVIDENCE AND MATERIAL ON RECORD HAS BE EN ABLE TO PROVE THAT HE HAS ITA NO. 237/AGRA/2011 9 RECEIVED ENTIRE SALE CONSIDERATION OF SHARES THROUG H KNOWN SOURCES. THEREFORE, NO ADDITION U/S. 68 COULD BE MADE AGAINST THE ASSESSEE . AS A RESULT, THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 6. 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/- 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