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

ITA 238/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0397 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 10 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-03-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 23-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: MAHESH AGARWAL
• 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. 238/AGRA/2011 ASSTT. YEAR : 2002-03 A.C.I.T., 4(1), VS. RAM PRAKASH GARG, HUF, AGRA. C/O M/S. PRAKASH COLD STORAGE, HATHRAS ROAD, AGRA. (PAN : AAEHR 5424 H) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI MAHESH AGARWAL, C.A. DATE OF HEARING : 13.03.2013 DATE OF PRONOUNCEMENT OF ORDER : 22.03.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, DEHRADUN (CAMP AT AGRA) DATED 21.01.2011 FOR THE AS SESSMENT YEAR 2002-03, CHALLENGING THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.19,61,022/- MADE BY THE AO BY TREATING THE CLAIM OF SHARE TRANS ACTIONS SHOWN BY THE ASSESSEE AS GENUINE. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,31,261/-. THE ASSES SEE DERIVES INTEREST INCOME ITA NO. 238/AGRA/2011 2 FROM M/S. PRAKASH COLD STORAGE AND INCOME FROM OTHE R SOURCES. INCOME FROM CAPITAL GAINS HAS ALSO BEEN SHOWN DURING THE YEAR U NDER CONSIDERATION. THE ASSESSEE HAS SHOWN RECEIPT OF AMOUNTS ON SALE OF SH ARE OF ANKUR COMMERCIAL LTD., CAPITAL TRADE LINK, ABHINAV LEASING & MORAL LEASING LTD., ON WHICH LONG-TERM CAPITAL GAINS OF RS.19,61,022/- HAS BEEN WORKED OUT AFTER DEDUCTING PURCHASE PRICE OF SHARES AND BROKERAGE. THE SHARES WERE SOLD THROU GH THE BROKERS, M/S. AGARWAL & CO., DELHI, M/S. INTERLINK MARKETING & SECURITIES COMPANY AND M/S. NORTH INDIA SECURITIES PVT. LTD., NEW DELHI. THE DETAILS OF SHARE TRANSACTIONS, ON WHICH LONG-TERM CAPITAL GAINS HAVE BEEN SHOWN IS NOTED AT PAGE 1 OF THE ASSESSMENT ORDER. THE AO AFTER MAKING ENQUIRY DID NOT ACCEPT T HE CLAIM OF THE ASSESSEE REGARDING INCOME EARNED ON ACCOUNT OF LONG-TERM CAP ITAL GAINS AND HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE SALE OF SHARES AND GENUINENESS OF RECEIPTS OF MONEY FROM SALE OF SHARES. SO ENTIRE DRAFT AMOUNT R ECEIVED FROM SALE OF SHARES AMOUNTING TO RS.19,61,022/- WAS TREATED AS INCOME F ROM UNEXPLAINED SOURCES AND WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ADDITI ON WAS CHALLENGED BEFORE THE LD. CIT(A) AND ASSESSEE EXPLAINED THAT HE HAS ENTER ED INTO GENUINE TRANSACTIONS, WHICH HAVE BEEN SUPPORTED BY THE MATERIAL ON RECORD AND DETAILED WRITTEN SUBMISSIONS OF THE ASSESSEE ARE INCORPORATED IN THE APPELLATE ORDER TO PROVE THAT THE ASSESSEE GENUINELY ENTERED INTO TRANSACTIONS OF SAL E OF SHARES AND SHARES WERE SOLD TO THE BROKERS AT PREVAILING MARKET RATE AS PER THE RATES LISTED AT MADHYA PRADESH ITA NO. 238/AGRA/2011 3 STOCK EXCHANGE. THE LD. CIT(A) CONSIDERING THE EXPL ANATION OF THE ASSESSEE AND THE REMAND REPORT OF THE AO ACCEPTED THE CLAIM OF T HE ASSESSEE AND DELETED THE ADDITION. HIS FINDINGS IN THE APPELLATE ORDER IN PA RA 6 TO 7 ARE REPRODUCED AS UNDER : 6. EXPLANATIONS TO THE ABOVE CONTENTIONS OF THE LD . AO ARE ALREADY AVAILABLE IN THE COMPARATIVE COMMENTS OF TH E LD. AR REPRODUCED FROM PAGE 4-11 ANTE. AS AGAINST THE LD. AO'S REPEATED CONTENTIONS THAT THE SHARES WERE TRADED IN THE DELH I STOCK EXCHANGE, THE APPELLANT HAS CONSISTENTLY MAINTAINED THAT THE SHARES WERE SOLD THROUGH THE BROKERS REGISTERED WITH SEBI AND THAT S INCE SHARES WERE TRANSACTED THROUGH THE BROKERS, THE APPELLANT HAD N O LINK WITH THE STOCK EXCHANGES. THE LD. AO HAS NOT COUNTERED THIS ASSERTION OF THE LD. AR AND HAS ALSO NOT GIVEN OR REPORTED ANY EVIDE NCE SHOWING APPELLANT'S DIRECT TRANSACTIONS THROUGH THE STOCK E XCHANGE NOT INVOLVING THE BROKER. AS REGARDS NO RESPONSE FROM THE BROKERS, LD. AR HAS RELIED ON SEVERAL DECISIONS OF HON'BLE IT AT AG RA BENCH IN SEEMA GARG VS. ITO IN ITA NO.252 (AGRA)/2005, RAM PRAKASH GARG HUF VS. ACIT ITA NO.253(AGRA)/2005 AND RAJESH GARG VS. ACIT ITA NO.254(AGRA)/2005 (COMMON ORDER DATED 31.03.2009) H OLDING THAT IF THE COMPANIES OR THE BROKERS DID NOT RESPOND TO THE ENQUIRIES OF THE DEPARTMENT OR DID NOT ATTEND TO THE SUMMONS ISSUED TO THEM, THE ASSESSEE CAN NOT BE BLAMED FOR THAT. IT HAS BEEN H ELD THAT ASSESSEE DOES NOT HAVE ANY POWER OR AUTHORITY AT HIS COMMAND TO COMPEL THE COMPANIES OR THE BROKERS TO COMPLY WITH THE DIRECTI ONS OF THE DEPARTMENT. THE APPELLANT HAS FURTHER RELIED UPON THE DECISION OF KOLKATA HIGH COURT IN THE CASE OF CIT VS. CARBO IND USTRIAL HOLDINGS (244 ITR 422) HOLDING THAT IF THE SHARE BROKER, EVE N AFTER ISSUE OF SUMMONS DOES NOT APPEAR, FOR THAT REASON, THE CLAIM OF THE ASSESSEE SHOULD NOT BE DENIED. IT IS, THEREFORE, TO BE NOTE D THAT THE LD. AO'S OBJECTION THAT BROKER OR THE COMPANY DID NOT RESPON D IS ALREADY ADJUDICATED BY THE HON'BLE JURISDICTIONAL TRIBUNAL AND AS MENTIONED ABOVE THE VIEW OF THE HON'BLE TRIBUNAL HAS BEEN UPH ELD BY HON'BLE HIGH COURTS. THE CONTENTIONS RAISED AND THE BASIS U SED BY THE LD. AO FOR HOLDING THAT THE CLAIM OF SALE OF SHARES WAS BO GUS HAS NOT BEEN APPROVED IN JUDICIAL SCRUTINY AT ANY LEVEL AND, THE REFORE, THE VIEW TAKEN BY HIM FOR HOLDING THE SALE OF SHARES AS FICT ITIOUS OR BOGUS IS NOT TENABLE IN LAW PARTICULARLY WHEN THE FACTS AND ISSU ES ARE NOT DISTINGUISHED BY THE DEPARTMENT. THE TRANSACTIONS I NVOLVED IN THE ITA NO. 238/AGRA/2011 4 CASE OF THE APPELLANT AND THE FACTS AND THE ISSUES RELATABLE TO SUCH TRANSACTIONS ARE FOUND TO BE SQUARELY COVERED UNDER SEVERAL DECISIONS OF THE HON'BLE JURISDICTIONAL TRIBUNAL SO MUCH SO T HAT THERE IS NO FACET OF THE CLAIMED SHARE TRANSACTIONS IN THIS CASE WHIC H IS ALREADY NOT ADJUDICATED BY THE HON'BLE JURISDICTIONAL TRIBUNAL. ON THE GENUINENESS OF SALE TRANSACTIONS, THE LD. AR HAS RE LIED ON THE DECISION IN ASHOK KUMAR LAVANIA VS. ACIT ITA NO.112 (AGRA)/2 004 WHEREIN THE HON'BLE TRIBUNAL HAS HELD IN SO MANY WORDS THAT THE DEPARTMENT CAN NOT TREAT LONG TERM CAPITAL GAINS AS ASSESSEE'S INCOME FROM OTHER SOURCES. NOT STOPPING HERE, THE LD. AR HAS GONE ON TO RELY ON THE DECISION OF HON'BLE APEX COURT IN UMACHARAN SHAW & BROS. VS. CIT (1959) 37 ITR 271 HOLDING THAT SUSPICION HOWSOEVER STRONG CAN NOT TAKE THE PLACE OF LEGAL PROOF. IN YET ANOTHER DECI SION, NAMELY; KISHANCHAND CHELLARAM VS. CIT (125 ITR 713), THE HO N'BLE SUPREME COURT HELD THAT THE AMOUNT CAN NOT BE ASSESSED AS U NDISCLOSED INCOME OF THE ASSESSEE IN THE ABSENCE OF POSITIVE MATERIAL BROUGHT UP BY THE REVENUE TO PROVE THAT THE AMOUNT IN FACT BELONGED T O THE ASSESSEE AS THE BURDEN LAY ON THE REVENUE. AN ANALYSIS OF THE B ASIS USED BY THE AO FOR ASSESSING THE DECLARED LONG TERM CAPITAL GAINS AS UNDISCLOSED INCOME OF THE APPELLANT AND REPORT SUBMITTED LATER ON BRING OUT THAT FOR NON-PRODUCTION OF ANY POSITIVE EVIDENCE, THE VI EW TAKEN BY THE AO CAN AT BEST BE SAID TO BE HIS PERSONAL OPINION AND ANY ASSESSMENT MADE ON THE BASIS OF MERE OPINION IS NOT TENABLE IN LAW. THEREFORE, FOLLOWING THE AFOREMENTIONED DECISIONS OF THE HON'B LE JURISDICTIONAL ITAT, BOTH THE ADDITIONS MADE BY THE LD. AO ARE DEL ETED AND SINCE THE MAIN REASON FOR THE ADDITION HAS BEEN HELD TO BE BA SED ON MERE OPINION, THE ADDITION ON ACCOUNT OF ENTRY CHARGES I S LEFT WITH NO BASIS TO BE SUSTAINED. ACCORDINGLY, ALL THE GROUNDS OF AP PEAL, REPRODUCED ON PAGES 2 TO 4 ANTE, STAND ADJUDICATED. BOTH THE ADDITIONS MADE ARE DELETED IN THE LIGHT OF THE FOREGOING DISCUSSION. 7. IN THE RESULT, THE APPEAL IS ALLOWED. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE FACTS ARE IDENTICAL AS IN THE CASE OF SHRI RAJESH KUMAR GARG DECIDED BY THE ITAT, AGRA BENCH IN ITA NO. 182 OF 2006. HE HAS SUBMITTED A CH ART AT PAGE-C OF THE PAPER ITA NO. 238/AGRA/2011 5 BOOK TO SHOW THAT NAME OF THE COMPANY AND THE BROKE RS INVOLVED IN THE CASE OF ASSESSEE AND SHRI RAJESH KUMAR GARG ARE SAME WHICH ARE ALSO NOTED IN THE CASE OF SAME ASSESSEE AND IN CASE OF SHRI RAJESH KUMAR GARG , THE MATTER WAS FAVOURABLY DECIDED BY THE LD. JUDICIAL MEMBER. COPY OF THE ORD ER IS PLACED AT PAGES 29 TO 49 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE ALSO DEMONSTRATED FROM THE ORDER OF THE TRIBUNAL THAT THE PARTIES ARE SAME AS ARE IN THE CASE OF ASSESSEE. THEREFORE, TRANSACTIONS ARE IDENTICAL IN WHICH THE LD. ACCOUNTANT MEMBER DISAGREED WITH THE CASE OF THE ASSESSEE. COPY OF TH E ORDER OF LD. AM IS FILED AT PAGE 11 OF THE PAPER BOOK. THE MATTER WAS REFERRED TO TH E PRESIDENT, ITAT FOR NOMINATION OF THIRD MEMBER AND THE THIRD MEMBER (VP ) AGREED WITH THE VIEW OF THE LD. JM VIDE ORDER DATED 30.08.2011. COPY OF THE ORDER OF THIRD MEMBER IS FILED AT PAGE 3 OF THE PAPER BOOK AND IN VIEW OF THE MAJO RITY VIEW, ITAT, AGRA BENCH VIDE ORDER DATED 11.10.2011 PASSED ORDER IN FAVOUR OF THE ASSESSEE SHRI RAJESH KUMAR GARG IN ITA NO. 182/2006. HE HAS SUBMITTED TH AT THEREAFTER ITAT, AGRA BENCH IN THE CASE OF ACIT VS. RAM PRAKASH GARG IN I TA NO. 237/AGRA/2011 ON THE SAME IDENTICAL FACTS DISMISSED THE DEPARTMENTAL APPEAL VIDE ORDER DATED 18.01.2013 IN WHICH IN PARAS 5 & 6, THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED 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 ITA NO. 238/AGRA/2011 6 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 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 ITA NO. 238/AGRA/2011 7 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. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. 4. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUB MITTED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF ITAT THIRD MEMBER IN THE CASE OF RAJESH KUMAR GARG (SUPRA) AND IN THE CASE OF RAM PRAKASH GARG (S UPRA). THE LD. DR DID NOT DISPUTE THE ABOVE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT, AGRA BENCH IN THE CASE OF RAJESH KUMAR GARG AND IN THE CASE OF RAM PRAKASH GA RG (SUPRA). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE LD. COUNSEL FOR THE ASSESS EE HAS BEEN ABLE TO DEMONSTRATE THAT THE FACTS ARE SAME IN THE CASE ASSESSEE AS WER E CONSIDERED IN THE CASE OF RAJESH KUMAR GARG. PAGE-C OF THE PAPER BOOK IS FILED WHICH SUPPORTS THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE. NAME OF THE COMPANY AND T HE BROKERS INVOLVED FOR SALE OF THE SHARES ARE SAME AS WERE IN THE CASE OF RAJESH K UMAR GARG (SUPRA) AND IN THE ITA NO. 238/AGRA/2011 8 IDENTICAL FACTS, ITAT, THIRD MEMBER BENCH IN THE CA SE OF RAJESH KUMAR GARG IN ITA NO. 182/2006 (SUPRA) ALLOWED THE CLAIM OF THE A SSESSEE. THE THIRD MEMBER DECISION IS LIKE A DECISION OF SPECIAL BENCH AND TH EREFORE BINDING ON SUBSEQUENT BENCHES OF THE TRIBUNAL. SIMILAR VIEW IS TAKEN BY T HE ITAT, AGRA BENCH IN THE CASE OF RAM PRAKASH GARG (SUPRA). WE, THEREFORE, FO LLOWING THE ABOVE ORDERS, CONFIRM THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE LD. DR ALSO DID NOT DISPUTE THE CONTENTION OF THE LD. COUNSEL FOR T HE ASSESSEE. THEREFORE, THE DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. 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