The ACIT, 3(1), Indore V. Smt. Shaila Shah, Indore

ITA 25/IND/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7875 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S N AGRAWAL AND
• Keywords: Business income; Onus to prove
• Section: 68; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.25 & 26/IND/2012 A.YS. 2005-06 & 2006-07 ACIT-3(1), INDORE ..APPELLANT V/S. SMT. SHAILA SHAH, INDORE PAN AKTPS 4978 C ..RESPONDENT REVENUE BY SHRI ARUN DEWAN, SR. DR ASSESSEE BY S/SHRI S.N. AGRAWAL AND PANKAJ MOGRA, CAS DATE OF HEARING 6.6.2012 DATE OF PRONOUNCEMENT 6.6.2012 ORDER PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE ORDERS, BOTH DATED 28.10.2011, OF THE LEARNED FIRST APPELLATE AUTHORIT Y, INDORE FOR ASSESSMENT YEARS 2005-06 & 2006-07 ON COMMON GROUND S. 2 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD SHRI ARUN DEWAN, LD. SR. DR AND SHRI S.N. AGRAWAL ALONG WITH SHRI PANKAJ MOGRA, LD. COUNSEL FOR THE ASSESSEE. THE FIR ST COMMON GROUND RAISED PERTAINS TO DELETING THE ADDITION MAD E U/S 68 OF THE WITH REGARD TO SHARE TRANSACTION WITH M/S. CHAN DRABHAN BHAICHAND MUCHALA, M/S. SWASTIK FINLEASE LIMITED AN D M/S. PREMIUM GLOBAL SECURITIES P. LIMITED. THE CRUX OF A RGUMENTS ON BEHALF OF THE REVENUE IS THAT ONUS LIES ON THE ASSE SSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS. ON THE OTHER H AND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDE RS BY SUBMITTING THAT THE NECESSARY REQUIREMENT, CONTAINE D IN SECTION 68 OF THE ACT WAS DULY FULFILLED AND ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS WAS DISCHARGED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE INVOLVED IN THE BUSINESS OF TRADING IN SHARES AND DURING ASSESSMENT YEAR 2005-06, SHOWED INCOME FROM PURCHASE 3 AND SALES OF SHARES, SPECULATION OF SHARES. THE STA ND OF THE ASSESSING OFFICER IS THAT OVER THE YEARS, THE ASSES SEE ACCUMULATED THE LOSSES FROM THE BUSINESS OF THE SHA RES AND THE BUSINESS LOSS CAN BE SET OFF ONLY AGAINST BUSINESS PROFIT AND M/S. CHANDRABHAN BHAICHAND MUCHALA HAS MERELY ISSUED FAK E CONTRACT NOTE AND THE ASSESSEE NEVER PAID ANY AMOUNT TO THE BROKERS. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE PURCH ASED BUSINESS PROFIT AGAINST HER UNACCOUNTED CASH AND AS SUCH, AD DITION U/S 68 OF THE ACT WAS MADE. BEFORE THE LD. CIT(A), THE SUB MISSIONS OF THE ASSESSEE ARE SUMMARISED AS UNDER: 4.1.4 THE ASSESSEE ALSO OPPOSED THE THEORY OF THE ASSESSING OFFICER THAT THE ASSESSEE MANAGED THE PRO FIT ON SALE OF SHARES AS TO SET-OFF HER UNABSORBED BUSI NESS LOSSES. THE ASSESSEE HAD FILED HER INCOME TAX RETUR N FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 AS UNDER:- S. NO. A.Y. BUSINESS INCOME (RS.) CAPITAL GAIN/OTHER SOURCES (RS.) GROSS TOTAL INCOME (RS.) DEDUCTION CLAIMED UNDER CHAPTER VI-A (RS.) TOTAL INCOME (RS.) SET-OFF CLAIMED (RS.) TOTAL INCOME ASSESSED (RS.) 1 2005-06 3838200 175064 4013264 12000 4001264 4001 264 NIL 2 2006-07 4604540 47885 4652425 100000 4552425 2323 237 2229188 3 2007-08 1549258 4361665 5910923 100000 5810923 NI L 5810923 4 2008-09 493539 85018 578557 100000 478557 NIL 478 557 4.1.5 THE ASSESSEE FROM THE FIGURE OF THE ABOVE TABLE TRY TO EXPLAINED THAT THE ASSESSEE HERSELF PAID HUG E AMOUNT OF TAXES ON HER INCOME IN THE ASSESSMENT YEARS 2006-07 TO 2008-09 EVEN AFTER SET-OFF OF ENTI RE AMOUNT OF UNABSORBED LOSSES AVAILABLE OF PAST YEARS . THUS, THE VERSION OF THE ASSESSING OFFICER THAT THE 4 PROFITS ON SALE OF SHARES WERE MANAGED BY THE ASSESSEE TO SET-OFF HER UNABSORBED BUSINESS LOSSES IS NOT FACTUALLY CORRECT. 4.1.6 THE COUNSEL OF THE ASSESSEE DURING THE COURSE OF APPEAL HAS FAIRLY CONCEDED THAT WHILE FILING THE RE TURN OF TOTAL INCOME ENTIRE AMOUNT OF TOTAL INCOME HAS BEEN SET-OFF AGAINST THE UNABSORBED BUSINESS LOSSES FOR THE ASSESSMENT YEAR 2005-06 MORE SO WHEN THE ASSESSEE HAS INCOME FROM OTHER SOURCE OF RS 175064/- AND AFT ER REDUCING THE SAME BY THE AMOUNT OF DEDUCTION ALLOWE D UNDER CHAPTER VIA OF RS 12000/- REDUCED TO RS 1,63,064/-. THUS, SET-OFF OF UNABSORBED LOSSES REQU IRES TO BE ALLOWED TO RS 38,38,200/- AND NOT OF RS 40,01,264/ - AS CLAIMED BY THE ASSESSEE IN HER RETURN OF TOTAL INCOME. 3.1 AFTER CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES AND THE SUBMISSION OF THE ASSESSEE, THE LD. CIT(A) CONCLUDED AS UNDER: 4.1.7 ON PERUSAL OF THE ASSESSMENT ORDER, SUBMISSION AND DOCUMENTS FILED BY THE ASSESSEE ON DIFFERENT DA TES AND FACTUAL MATRIX OF THE CASE, IT IS PROVED THAT T HE ASSESSEE BAD PAID SUBSTANTIAL AMOUNT OF TAX ON ITS TOTAL INCOME VOLUNTARILY EVEN AFTER SET-OFF OF UNABSORBED AVAILABLE LOSSES. THE DEFECTS/ DEFICIENCIES AS POIN TED OUT BY THE ASSESSING OFFICER WAS DULY EXPLAINED BY THE ASSESSEE HENCE, THE ASSESSING OFFICER WAS NOT JUSTI FIED IN TREATING THE AMOUNT OF PROFIT ON SALE OF SHARES AS INCOME FROM OTHER SOURCES BY TREATING THE SAME AS N ON- GENUINE. THE ASSESSING OFFICER IS ACCORDINGLY DIREC TED TO CONSIDER THE PROFIT ON SALE OF SHARES OF RS 4021514 /- AS HER BUSINESS INCOME. HOWEVER, AS CONCEDED BY THE COUNSEL OF THE ASSESSEE SET-OFF OF UNABSORBED LOSSE S RESTRICTED TO RS 38,38,200/- AND NOT AS CLAIMED BY THE ASSESSEE IN HER INCOME TAX RETURN. 5 3.2 IF THE CONCLUSION DRAWN IN THE ASSESSMENT ORDER , IMPUGNED ORDER AND THE ASSERTION MADE BY THE LD. RE SPECTIVE COUNSEL ARE KEPT IN JUXTAPOSITION AND ANALYSED, UNC ONTROVERTED FACT IS THAT THE ASSESSEE HERSELF SHOWED IT AS BUSI NESS INCOME AND PAID SUBSTANTIAL AMOUNT OF TAX VOLUNTARILY EVEN AFT ER SETTING OFF OF UNABSORBED LOSSES, IN WHICH, NO DEFECTS OR DEFICIEN CIES WERE POINTED OUT BY THE ASSESSING OFFICER. IT SEEMS THAT THE ASSESSING OFFICER ADDED THE AMOUNT MERELY ON THE BASIS OF SUS PICION THAT CERTAIN FAKE ENTRIES WERE MANAGED FROM THE BROKERS. WE ARE OF THE VIEW THAT SUSPICION CANNOT TAKE THE SHAPE OF EV IDENCE, HOWEVER STRONG IT MAY BE, UNLESS AND UNTIL IT IS CO RROBORATED WITH MATERIAL. NO SUCH MATERIAL HAS BEEN PLACED ON RECOR D, THEREFORE, WE FIND NO INFIRMITY IN THE STAND OF THE LD. CIT(A) , CONSEQUENTLY, THIS GROUND OF THE REVENUE IS HAVING NO MERIT, THER EFORE, DISMISSED. THIS CONCLUSION WILL COVER THE GROUND PR EFERRED FOR ASSESSMENT YEAR 2006-07 ALSO BECAUSE IDENTICAL SITU ATION IN THE CASES OF MAHASAGAR SECURITIES AND M/S. SHARUKH & TA RA ALSO. 6 4. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS.2,40,075/- (ASSESSMENT YEAR 2005-06) AS UNEXPLAI NED EXPENDITURE. THE LD. SR. DR SUPPORTED THE ASSESSMEN T ORDER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEFENDED T HE IMPUGNED ORDER. 4.1 WE HAVE PERUSED THE RECORD AVAILABLE ON THE FIL E AND CONSIDERED THE ARGUMENTS ADVANCED BY THE LD. RESPEC TIVE COUNSEL. WE FIND THAT THE AMOUNT OF RS.2,40,075/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY ALLEGING THAT THE EXPENDI TURE WAS INCURRED ON ARRANGING PROFIT OF RS.40,21,514/- @6%. HOWEVER, WE FIND THAT THERE IS NO EVIDENCE ON RECORD AS ON W HAT BASIS, THE PAYMENT OF 6% PAID ON THE ALLEGED AMOUNT WAS BROUGH T INTO PICTURE. THE BROKER HAS DULY CONFIRMED THE TRANSACT ION IN RESPECT OF PROFIT FROM SALE OF SHARES. EVEN OTHERWISE, WHIL E DECIDING GROUND NO.1 ABOVE, THE CLAIM OF THE ASSESSEE HAS BE EN ACCEPTED THAT THE PROFIT FROM THE SALE OF SHARES WAS GENUINE BY ACCEPTING THE SAME AS BUSINESS INCOME, THEREFORE, THE ADDITIO N WAS RIGHTLY 7 DELETED BY THE LD. FIRST APPELLATE AUTHORITY, CONSE QUENTLY, THIS GROUND OF THE APPEAL OF THE REVENUE IS ALSO HAVING NO MERIT. 5. SO FAR AS DELETING THE ADDITION OF RS.82,214/- AS INDIRECT EXPENSES ARE CONCERNED, WE FIND THAT DISAL LOWANCE OF THE IMPUGNED AMOUNT WAS MADE BY THE LD. ASSESSING OFFIC ER OUT OF VARIOUS EXPENSES. THE DISALLOWANCE WAS MADE OUT OF AUDIT FEES, BANK CHARGES, DEMAT CHARGES, LEGAL & PROFESSIONAL C HARGES AND SERVICE TAX ETC. THE RELEVANT RECORD HAS ALREADY BE EN EXAMINED BY THE LD. CIT(A) IN WHICH NO DEFECT WAS POINTED OU T BY THE REVENUE. EVEN OTHERWISE, THESE ARE ALLOWABLE DEDUCT IONS, CONSEQUENTLY, WE FIND NO INFIRMITY IN THE CONCLUSIO N DRAWN IN THE IMPUGNED ORDER. THE REMAINING GROUNDS I.E. GROUND N O.4 TO 6 ARE NARRATIVE IN FORM AND HAVE BEEN DULY CONSIDERED BY THE LD. CIT(A). EVEN OTHERWISE, THESE ARE IN SUPPORT OF REM AINING GROUNDS. 8 FINALLY, BOTH THE APPEALS OF THE REVENUE ARE HAVING NO MERIT, THEREFORE, DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT TH E CONCLUSION OF HEARING ON 6.6.2012. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 6.6.2012 !VYS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE