RAJKUMAR ADUKIA, MUMBAI V. ACIT CC-13, MUMBAI

ITA 2515/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1984 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R N JHA
• Assessee Lawyers: BEHARILAL
• Keywords: Unexplained expenditure; Business income; Search and seizure; Cost of acquisition
• Section: 69C; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, MUMBAI. BEFORE S/SHRI N.V.VASUDEVAN, JM & T.R.SOOD, AM I.T.A NOS. 2515/ MUM/2009 ASSESSMENT YEAR: 2005-06 RAJKUMAR ADUKIA, V. THE ACIT, CENT. CIRCLE-13, 3, MERIDIAN APT, BLDG NO.1, VEERA DESAI ROAD, MUMBA I. ANDHERI(W), MUMBAI-58. PA NO.AABPA 8627 J I.T.A NOS. 2516/ MUM/2009 ASSESSMENT YEAR: 2005-06 SANGEETA R. ADUKIA, V. THE ACIT, CENT. CIRCLE-13 , 3, MERIDIAN APT, BLDG NO.1, VEERA DESAI ROAD, MUMBA I. ANDHERI(W), MUMBAI-58. PA NO.AABPA 8627 J (APPELLANT) (RESPONDENT) APPELLANTS BY: SHRI BEHARILAL RESPONDENT BY : SHRI R.N.JHA, CIT (DR) O R D E R PER T.R.SOOD, AM THE APPEALS FILED BY THE ASSESSEES ARE DIRECTED AG AINST SEPARATE ORDERS OF LD CIT (A)-VII, MUMBAI FOR THE ASSESSMENT YEAR 2005-06 . IN BOTH THE APPEALS, THERE IS ONE COMMON ISSUE I.E. ADDITION MADE ON ACCOUNT OF P URCHASE VALUE OF THE SHARES WHICH HAS BEEN ULTIMATELY ACCEPTED BY THE ASSESSEE AS BOG US TRANSACTION. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT A S EARCH WAS CONDUCTED IN CASE OF BOTH ASSESSES. DURING THE SEARCH, BOTH THE ASSESSE S FURTHER DECLARED INCOME OF RS.4,79,369/- AND RS.4,79,625/-, RESPECTIVELY. HOW EVER, THE AO NOTICED THAT THE ASSESSEES HAVE NOT DECLARED THE PURCHASE PRICE OF S HARES AMOUNTING TO RS.19,553/- AND RS.18,993/-, RESPECTIVELY. THESE AMOUNTS PERTAINED TO PURCHASE OF SHARES AND SINCE THE ASSESSEES HAD DECLARED ONLY INCOME FROM NET CAPITAL GAIN AND ONCE TRANSACTIONS FOR SALE AND PURCHASE OF SHARES ACCEPTED TO BE BOGUS, THEN T HE TOTAL SALES CONSIDERATION HAS TO ITA NO.2515 & 2516/M/09 2 BE CONSIDERED AS INCOME. ACCORDINGLY, ADDITION OF RS.19,553/- AND RS.18,993/- WAS MADE IN THE HANDS OF THE RESPECTIVE ASSESSES. THE ACTION OF THE ASSESSING OFFICER HAS BEEN CONFIRMED BY THE CIT (A). 3. BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN CASE OF ANOTHER ASSESSE E OF THE GROUP CONCERN I.E. SMT KAMALBEN PANDIT IN ITA NO.822/M/2009 FOR A.Y. 2003- 04(COPY OF ORDER WAS FILED ON RECORD). 4. ON THE OTHER HAND, LD CIT (DR) SUBMITTED THAT VI DE PARA 5 OF THE TRIBUNALS ORDER, IT HAS BEEN OBSERVED THAT SINCE THE ASSESSEE HAS OFFERED THE ENTIRE SALE PROCEEDS, THEN NO FURTHER ADDITION IS CALLED FOR U/S.69C WHER EAS IN THE CASE BEFORE US, ONLY NET CAPITAL GAIN HAS BEEN OFFERED. THEREFORE, THE PURC HASE PRICE OF SHARE HAS TO BE ADDED SEPARATELY WHICH WILL ULTIMATELY AMOUNT TO TAXING O F TOTAL SALES CONSIDERATION OF SHARES. 5. IN THE REJOINDER, LD COUNSEL REFERRED TO GROUND NO.2 TAKEN IN THE CASE OF SMT. KAMALBEN PANDIT IN ITA NO.822/M/2009 (SUPRA), WHICH IS REGARDING ADDITION OF RS.34,014/- ON ACCOUNT OF PURCHASE PRICE OF SHARES. HE FURTHER SUBMITTED THAT BASICALLY, NO MATERIAL WAS FOUND FOR PURCHASE OF SHARES AND TH E ASSESSEE HAS MERELY DECLARED THE INCOME TO BUY PEACE AND, THEREFORE, THERE WAS NO NE ED FOR SEPARATE ADDITION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. PARA 5 OF THE TRIBUNALS ORDER IN THE CASE OF SMT. KAMALABEN PANDIT (SUPRA) READS AS UNDER:- COMING TO GROUND NO. 2, WE FIND THAT THE ASSESSEE HAS OFFERED THE ENTIRE SALE PROCEEDS TO TAX. THE AO ADDED THE PURCHASE COST U/S 69C. WHEN THE ALLEGATION OF THE REVENUE IS THAT THE PURCHASE IS A BOGUS TRAN SACTION AND THAT THE ENTIRE SALE CONSIDERATION IS NOTHING BUT THE INCOME OF THE ASSESSEE, THEN IN OUR CONSIDERED OPINION, NO ADDITION COULD BE MADE U/S 6 9C. AS THE ENTIRE SALE PROCEEDS IS BROUGHT TO TAX, NO SEPARATE ADDITION IS JUSTIFIED U/S 69C. THE ABOVE CLEARLY SHOWS THAT THE ADDITION HAS BEEN DELETED BECAUSE THE ENTIRE SALES PROCEEDS WERE OFFERED FOR TAXATION. IN ANY CASE, O NCE THE TRANSACTION REGARDING CAPITAL GAIN IS ACCEPTED TO BE BOGUS DURING THE SEARCH, THE N WHOLE SALES CONSIDERATION OF SUCH SHARES HAS TO BE ADDED TO THE INCOME OF THE ASSESSE E. THEREFORE, WE FIND NOTHING WRONG IN THE ORDER OF THE CIT (A) AND CONFIRM THE S AME. ITA NO.2515 & 2516/M/09 3 7. ONE MORE ISSUE HAS BEEN RAISED IN THE CASE OF RA JKUMAR ADUKIA IN ITA NO.2525/M/2009 REGARDING ADDITION OF RS.24,946/- B EING 5% OF THE GROSS SALE PROCEEDS ON THE BASIS THAT APPELLANT MUST HAVE PAID SOME FEE S FOR GENERATION OF CAPITAL GAIN. 8. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THI S ISSUE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CAS E OF SMT. KAMALBEN PANDIT IN ITA NO.822/M/2009. PARAS 2 & 3 OF THE ORDER READ AS UN DER:- 2. THE ASSESSEE DERIVES INCOME FROM HOUSE PROPERTY AND OTHER SOURCES. A SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED ON 24-01-2006. DURING THE COURSE OF SEARCH IT HAS COME TO LIGHT THAT THE ASSE SSEE HAD OBTAINED ARTIFICIAL CAPITAL GAIN BY MANIPULATION OF SHARE TRANSACTIONS. THE ASSESSEE OBTAINED BACK DATED PURCHASE BILLS OF THE SHARES AND RECEIVED SHA RES IN PHYSICAL FORMAT. THE ASSESSEE AGREED THAT THESE ALLEGATIONS WERE TRUE AN D DECLARED LONG TERM CAPITAL GAINS. THE ISSUE IN DISPUTE BEFORE US IS AN ADDITIO N MADE AS UNEXPLAINED EXPENDITURE U/S 69C BEING 5% OF THE SALE PROCEEDS O N THE GROUND THAT COMMISSION IN SERVICE CHARGES WOULD HAVE BEEN PAID BY THE ASSESSEE AND SECONDLY RS.34,014/- ADDED U/S 69C AS PURCHASE COST OF SHARES. 3. WE HAVE HEARD MR. BEHARILAL, LEARNED COUNSEL FOR THE SSESSEE AND MR. LALCHAND, LEARNED DR. AS FAR AS THE FIRST ADDITION IS CONCERNED, THE ADDITION IS MADE U/S 69C ON THE GROUND THAT THE RATE OF COMMISS ION CHARGED BY THE BROKER/OPERATORS IS APPROXIMATELY 5%. NO EVIDENCE W AS FOUND DURING THE COURSE OF SEARCH NOR WAS ANY EVIDENCE GATHERED THEREAFTER TO PROVE THAT THE ASSESSEE HAD INCURRED THIS EXPENDITURE OF 5%. IN THE ABSENCE OF EVIDENCE OF HAVING INCURRED EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNT, IN OUR CONSIDERED OPINION, NO ADDITION COULD BE MADE U/S 69C. THE ADDITION HAS BE EN MADE ON THE BASIS OF SURMISES AND CONJECTURES. FROM THE ABOVE, IT IS CLEAR THAT THE FACTS ARE IDEN TICAL AS BEFORE US AND, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) WE DELE TE THE ADDITION AMOUNTING TO RS.24,946/- ON ACCOUNT OF 5% FEES. THIS GROUND IS ALLOWED. 9. IN THE RESULT, ITA NO.2515/M/2009 IS PARTLY ALLO WED AND ITA NO.2516/M/2009 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST MAY, 2010 SD/- (N.V.VASUDEVAN) (JUDICIAL MEMBER) SD/- (T.R.SOOD) (ACCOUNTANT MEMBER) MUMBAI, DATED 21 ST MAY, 2010 PARIDA ITA NO.2515 & 2516/M/09 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-C-VII, MUM BAI 4. COMMISSIONER OF INCOME TAX, CENT-1-, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.2515 & 2516/M/09 5 DATE INITIALS 1. DRAFT DICTATED ON 18.5.2010 PS 2. DRAFT PLACED BEFORE AUTHOR 18.5.2010 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER ITA NO.2515 & 2516/M/09 6