ITO 25(3)(3), MUMBAI V. AMRUTLAL H. CHITALIA, MUMBAI

ITA 2444/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8889 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: HITESH P SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SMT. ASHA VIJAYARAGHAV AN (JM) I.T.A.NO.2444/MUM/09 (A.Y. 2005-06) INCOME-TAX OFFICER-25(3)(3), C-11, R.NO.304, PRATAKSH KAR BHAVAN, BANDA KURLA COMPLEX, BANDRA(E), MUMBAI-400 051. VS. SHRI AMRUTLAL H.CHITALIA, PROP: M/S. DRASHTI CEMENT SUPPLIERS, SHOP NO.7, SUKAN APARTMENTS, M.G. ROAD, KANDIVLI (W),MUMBAI-400 067. PAN: AABPC1168G APPELLANT RESPONDENT APPELLANT BY SHRI SURENDRA KUMAR. RESPONDENT BY SHRI HI TESH P.SHAH. O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 09-02-2009 IN RELATION TO THE ASSTT. YEAR 2005- 06. 2. THE ONLY GRIEVANCE RAISED BY THE REVENUE IS AGAI NST THE DIRECTION OF CIT(A) FOR TREATING GAIN ON SALE OF SHARES AMOUNTING TO RS .14,75,185/- AS SHORT-TERM CAPITAL GAIN AS AGAINST INCOME FROM OTHER SOURCES T REATED BY THE AO. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE SHOWED LONG-TERM CAPITAL GAIN OF RS.14,75,185/- ON TRANSFER OF SHARE S OF BOLTON PROPERTIES P. LTD., WHICH WERE SHOWN TO HAVE BEEN PURCHASED FOR RS.26,3 72/-. THE ENTIRE LONG-TERM CAPITAL GAIN OF RS.14,48,813/- WAS CLAIMED AS EXEM PT U/S.10(38). THE AO RECEIVED INTIMATION FROM DDIT, CALCUTTA, INTIMATING THAT THE SO-CALLED CAPITAL GAIN ON SALE OF ABOVE SHARES WAS AN ARRANGED AND COLOURF UL TRANSACTION. ON BEING CALLED UPON TO EXPLAIN THE GENUINENESS OF THE CAPIT AL GAIN, THE ASSESSEE STATED THAT THE SHARES WERE PURCHASED, WHICH WERE TRANSFE RRED IN HIS NAME ON 15-05- 2003. SUBSEQUENTLY THESE WERE DELIVERED THROUGH DEM AT CHANNELS TO BROKERS ITA 2444/M/09 2 POOL ACCOUNT, WHICH WERE SOLD FETCHING THE AFORESA ID CAPITAL GAIN ON THE SCREEN OF CALCUTTA STOCK EXCHANGE. THE AO ISSUED SUMMONS U /S.131 TO BOLTON PROPERTIES LTD. WHOSE SHARES WERE CLAIMED TO HAVE B EEN PURCHASED BY THE ASSESSEE. THE COMPANY, IN ITS REPLY, ADMITTED THA T THE ASSESSEE LODGED 3800 SHARES FOR TRANSFER IN HIS FAVOUR WHICH WERE IN FAC T TRANSFERRED ON 15-05-2003. THESE SHARES DEMATERIALIZED ON 04-11-2004. EVEN THE NAME OF THE PREVIOUS OWNER FROM WHOM THE ASSESSEE PURCHASED THE SHARES W AS ALSO INTIMATED AS M/S. ALBRIGHT CONSTRUCTIONS P. LTD., P-27, PRINCEP STRE ET, 3 RD FLOOR, KOLKATTA-72. IT WAS ALSO INTIMATED THAT THE SHARES WERE LISTED IN CALCU TTA STOCK EXCHANGE . THE AO WAS NOT CONVINCED WITH THE ASSESSEES SUBMISSION AB OUT THE GENUINENESS OF THE TRANSACTION. HE, THEREFORE, TREATED THE ENTIRE SALE PROCEEDS OF RS.14.75 LAKHS AS INCOME FROM OTHER SOURCES. 4. IN THE FIRST APPEAL, THE LD. CIT(A) CAME TO HOLD THAT THE SHARES WERE NOT PURCHASED ON 15-05-2003 BUT ON 04-11-2004, BEING TH E DATE WHEN THESE CAME TO THE DEMAT ACCOUNT OF THE ASSESSEE. IN THIS WAY, THE HOLDING PERIOD OF THE SHARES WAS REDUCED AND THE LD. CIT(A) DIRECTED TO T AX GAIN ON SALE OF SHARES AS SHORT-TERM CAPITAL GAIN. THE REVENUE IS IN APPEAL AGAINST THE SAID DIRECTION OF THE LD. CIT(A). ON A PERTINENT QUERY, THE LD. A.R. ADMITTED THAT NO CROSS APPEAL WAS FILED BY THE ASSESSEE. 5. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS SEEN THAT THE PARTY FROM WHOM THE ASSESSEE P URCHASED THE SHARES WAS BROUGHT TO THE NOTICE OF THE AO WITH COMPLETE ADDRE SS. NO QUERY WAS MADE BY THE AO ABOUT THE GENUINENESS OF THE PURCHASE TRANSA CTION. M/S BOLTON PROPERTIES LTD., WHOSE SHARES WERE PURCHASED BY THE ASSESSEE, INTIMATED TO THE AO IN RESPONSE TO SUMMONS U/S.131 THAT THE SHARES WERE TR ANSFERRED IN THE NAME OF THE ASSESSEE ON 15-05-2003. IN THAT VIEW OF THE MAT TER, THE FACT OF ASSESSEE HAVING PURCHASED THE SHARES STOOD AMPLY PROVED. ONC E IT IS PROVED THAT THE ITA 2444/M/09 3 ASSESSEE MADE PURCHASE OF SHARES AND ALSO SOLD THE SAME, THE GENUINENESS OF THE TRANSACTION CANNOT BE BROUGHT UNDER THE SHADOW OF DOUBT. IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN OVERTURNIN G THE ASSESSMENT ORDER ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THE 21ST DAY OF JANUA RY, 2011. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI: 21ST JANUARY , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-XXV,MUMBAI. 4 CIT,MC-25,MUMBAI. 5.DR, A BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA 2444/M/09 4 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 17-01-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 17-01-201 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *