ACIT, New Delhi V. M/s Kamal Kishore Aggarwal & Songs. (HUF), Delhi

ITA 2504/DEL/2011

• Counselvise Citation: 250420114 RSA 2011
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Share purchase agreement
• Section: 143(3); 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO: 250 4 /DEL/2011 A.Y.: 200 4 - 05 ACIT, CENTRAL CIRCLE 11 VS. KAMAL KISHORE AGGARWAL & SONS (HUF) ROOM NO.364, ARA CENTRE K 2/11, MODEL TOWN JHANDEWALAN EXTN. DELHI 110 009 NEW DELHI PAN: AADHK 6648 B CROSS OBJECTION NO.6 3 /DEL/2012 (IN ITA 250 4 /DEL/2011) A.Y. 200 4 - 05 KAMAL KISHORE AGGARWAL & SONS (HUF) VS. ACIT, CC 11 DELHI NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH.VINOD BINDAL, C.A. AND SMT.SWEETY KOTHARI, ADV. REVENUE BY : SH.T.VASANTHAN, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(A) - I, NEW DELHI DATED 28.02.2 011 PERTAINING TO THE A.Y. 2004 - 05. THE ASSESSEE FILED THE CROSS OBJECTION. 1.1. THE ASSESSEE FILED AN AFFIDAVIT, EXPLAINING THE REASONS OF DELAY AND SEEKING CONDONATION, THE SUM AND SUBSTANCE OF WHICH IS THAT THE COUNSEL OF THE ASSESSEE MS.SWEETI KOHTARI, WAS ILL AND DUE TO HER NEGLIGENCE THESE WERE NOT FILED. IT WAS FURTHER STATED THAT RULE 27 OF THE ITAT RULES IS BEING 2 INVOKED BY THE ASSESSEE4 FOR THE REASON THAT THE LD.CIT(A) HAS DISMISSED THESE GROUNDS, WITHOUT DISCUSSION. 1.2. MS. SWEET Y KOTHARI FILED AN AFFIDAVIT ADMITTING THE NEGLIGENCE ON HER PART IN FILING THE APPEAL. AFT ER CONSIDERING THE SUBMISSIONS, WE CONDONE THE DELAY AND ADMIT THE CROSS OBJECTION. 1.3. GROUNDS OF APPEAL RAISED BY THE REVENUE: 1. THE ORDER OF THE LD.CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. WHETHER THE LD.CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS OF THE CASE DELETING THE ADDITIONS MADE BY THE AO IN THE ABSENCE OF COMPLETE SATISFACTORY DOCUMENTARY EVIDENCE IN RESPECT OF LONG TERM CAPITAL GAIN. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL . 1.4. GROUNDS OF APPEA L RAISED IN THE CROSS OBJECTION ARE AS UNDER: 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN PASSING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153C/A OF THE ACT WHICH I S ILLEGAL, BAD IN LAW AND VOID AB - INITIO SINCE NEITHER ANY WARRANT/PANCHANAMA WAS MADE IN THE NAME OF THE APPELLANT TO INITIATE PROCEEDINGS U/S 153A NOR THE MANDATORY SATISFACTION TO ASSUME JURISDICTION ON THE APPELLANT IN TERMS OF S.153C WAS RECORDED BY T HE AO IN THIS CASE. THUS, THE ASSESSMENT SO FRAMED SHOULD BE STRUCK DOWN AS NULL AND VOID AB INITIO. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE AO IN PASSING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 153C/A OF THE ACT WITHOUT SER VING ANY SPECIFIC NOTICE U/S 143(2) ON THE APPELLANT. THUS, THE ASSESSMENT SO FRAMED IS BAD IN LAW AND SHOULD B NULLIFIED SINCE ISSUANCE OF NOTICE U/S 143(2) IS A MANDATORY REQUIREMENT AND NOT A MERE FORMALITY. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OR ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE LD.CIT(A) AT PARA 5 .1 OF HIS ORDER HAD HELD AS FOLLOWS. 3 5.1. GROUND ON IDENTICAL ISSUE WAS RAISED AS GROUND NO.4 IN APPEAL NO.97/08 - 09 IN THE CASE OF K.K. AGGARWAL & SONS FOR THE A.Y. 2001 - 02, WHEREIN THIS GROUND OF APPEAL HAS BEEN ALLOWED AFTER DETAILED DISCUSSION. THE SAME IS NOT REPEATED HERE FOR THE SAKE OF BR EVITY. THUS THE ADDITION OF RS.19,10,000/ - IS DELETED AND THE AO IS DIRECTED TO CONSIDER THE AMOUNT OF RS.18,48,000/ - AS LONG TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE AND BE CHARGED TO TAX @ 10% AS OFFERED BY THE ASSESSEE. 2.1 . THE LD.CIT(A) - I, NEW DELHI VIDE HIS ORDER DT. 28.02.2011 IN ITA NO. 97/208 - 09 IN THE CASE OF M/S KAMAL KISHORE AGGARWAL & SONS (HUF) FOR THE A.Y. 2001 - 02 AT PARA 5.3 HAD HELD AS FOLLOWS. 5.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS PURCHASED THE SHARES IN EARLIER YEAR AND DULY DISCLOSED THE SAME IN THE BALANCE SHEET OF THE ASSESSEE. THE SHARES WERE OF A LISTED COMPANY AND WERE DULY TRANSFERRED IN THE NAME OF THE APPELLANT AS CAN BE SEEN FROM THE SHARE CERTIFICATES PLACED ON RECORD. THE SHARES WERE DULY REGISTERED IN THE RECORDS OF MINISTRY OF COMPANY AFFAIRS / ROC. THE SHARES WERE HELD FOR MORE THAN A YEAR AND THEN WERE SOLD THROUGH BROKERS WHICH WERE REGISTERED WITH SEBI . THE RATES OF SALE AND PURCHASE TALLIES WITH THE RATES QUOTED IN MP STOCK EXCHANGE WHICH PROVES THAT THE SHARES WERE SOLD ON THE MARKET RATE. THE SHARE BROKER DID NOT MENTION THE NAME OF THE ASSESSEE IN HIS STATEMENT RECORDED BY THE INVESTIGATION WING MUCH PRIOR TO THE DATE OF SEARCH. THE ASSESSEE FILED AN AFFIDAVIT DATED 23 / 12/2008 OF MR. DILEEP KUMAR BHANDARI STATING THE FACTS REGARDING SALE OF 20,000 SHARES OF INNOVATIVE FINVEST THROUGH HIM. THE ASSESSING OFFICER DID NOT CROSS - EXAMINE THE SAID PERSON. THE ASSESSING OFFICER DI D NOT PROVIDE ANY OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THE BROKER WHOSE STATEMENT WAS RELIED UPON BY THE ASSESSING OFFICER. NO EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH TO SUGGEST THAT THE TRANSACTIONS OF SALE OF SHARES WERE NOT GENUINE. 5.3. 1. THE ASSESSEE PLACED ON RECORD ALL THE EVIDENCES TO SUBSTANTIATE THE SALE OF SHARES AS HAS BEEN MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER MADE THE ADDITION BY MERELY RELYING ON THE STATEMENT OF A BROKER WHICH WAS NOT RECORDED IN THE COURS E OF ASSESSMENT PROCEEDINGS OF THE 4 ASSESSEE. THE SAID STATEMENT WAS RELIED UPON WITHOUT CONFRONTING THE SAME WITH THE APPELLANT AND THEREFORE NO ADVERSE COGNIZANCE OF THE SAID STATEMENT CAN BE TAKEN. THE ASSESSING OFFICER DID NOT BRING ANY EVIDENCE ON RECO RD TO CONTROVERT THE EVIDENCES FILED BY THE APPELLANT OR TO ALLEGE THAT THE TRANSACTIONS WERE BOGUS. THUS THERE WAS NO MATERIAL WITH THE ASSESSING OFFICER TO REACH TO THE CONCLUSION THAT THE ASSESSEE HAD SOLD THE SHARES AT AN INFLATED RATE TO CLAIM BOGUS L ONG TERM CAPITAL GAIN. THE SALE PRICE OF SHARES OF THE SAID COMPANY IS DULY SUPPORTED BY MARKET RATES PREVAILING ON THE DATE OF SALES. THERE WAS OFFICIAL QUOTATION OF THE MP STOCK EXCHANGE ON THE DATE OF SALE WHICH CLEARLY SHOWED THAT THE SHARES OF INNOVAT IVE FINVEST WERE TRADED @ RS. 70 EACH ON 29 / 11 / 2000. NO ENQUIRY OF ANY NATURE WAS MADE FROM THE BUYERS OR SELLERS OF THE SHARES OR FROM R O C REGARDING THE SAID TRANSACTIONS TO PROVE OTHERWISE. 5.3.2. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING AUTHORITI ES: A) SMT. SUNITA OBEROI VS ITO(2009) 126 TTJ (AGRA)TM 745 B) ACIT VS KAMAL KUMAR S. AGRAWAL (LNDL.) & ORS.(2010) 133 TTJ (NAG) 818 C) SHRIPAL SINGH GULATI VS ITO(2008) 9 DTR (AGRA) (TRIB) 564 D) SHRI GAJENDRA SINGH IN ITA NO. 1898/D/06 BY HON'BLE ITAT, DELHI BENCH 5.3.3. THE FACTS OF THE ABOVE CASES SQUARELY APPLY TO THE CASE OF THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS PLACED ON RECORD ALL THE EVIDENCES TO SUPPORT THE SALE TRANSACTIONS INCLUDING THE QUOTATION OF THE SAID SHA RES ON THE DATE OF SALE WHICH TALLIES WITH THE SALE PRICE OF THE ASSESSEE. NO OPPORTUNITY TO CROSS - EXAMINE THE BROKER WAS GIVEN TO THE ASSESSEE. THESE AUTHORITIES HAVE HELD THAT NO ADVERSE COGNIZANCE OF THE FACT THAT THE BROKER COULD NOT BE PRODUCED OR THE COMPANIES WERE NOT FOUND AT THEIR ADDRESSES CAN BE TAKEN. THUS THE ABOVE MENTIONED AUTHORITIES ARE SQUARELY APPLICABLE TO THE ASSESSEE. IN VIEW OF THE EVIDENCES AND AUTHORITIES PLACED ON RECORD BY THE ASSESSEE, IN THE ABSENCE OF ANY EVIDENCE OR DOCUMENT BROUGHT ON RECORD BY THE ASSESSING OFFICER TO NEGATE THE CONTENTIONS RAISED BY THE ASSESSEE, I AM OF THE VIEW THAT THE TRANSACTION OF SALE OF THE SAID SHARES WAS GENUINE AND RESULTED INTO A LONG TERM CAPITAL GAIN OF RS. 13,52,6501 - TO THE ASSESSEE. THUS TH E ADDITION OF 5 RS. 13,93,700 / - IS HEREBY DELETED ASSESSING OFFICER IS DIRECTED TO ASSESS THE LONG TERM CAPITAL GAIN AS DECLARED BY THE ASSESSEE AND CHARGE THE SAME TO TAX @ 10%. THUS THIS GROUND OF APPEAL IS ALLOWED. 2.2. THIS FACTUAL FINDINGS COULD NOT B E CONTROVERTED BY THE LD.D.R. IN THE RESULT THIS GROUND OF THE REVENUE IS DISMISSED. REVENUE S APPEAL IS DISMISSED. 3. AS WE HAVE GRANTED RELIEF ON MERITS, THE LEGAL ISSUES RAISED IN THE CROSS OBJECTION WHICH WERE NOT ADJUDICATED BY THE FIRST APPELLAT E AUTHORITY, ARE NOT DISPOSED OF BY US, AS IT WOULD BE AN ACADEMIC EXERCISE. 4 . IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS THE C.O. FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 T H SEPTEMBER, 2015. S D / - S D / - (I.C. SUDHIR) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 1 8 T H SEPTEMBER, 2015 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR