Sri Shantilal Vira, Kolkata V. ACIT, Circle - 45, Kolkata, Kolkata

ITA 256/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1888 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA A DDL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO.256/KOL/2016 ASSESSMENT YEAR : 2006-07 SHRI SHANTILAL VIRA -VS.- A.C.I.T.- CIR CLE-45, KOLKATA KOLKATA. [PAN : ABTPV 6063 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI S.DASGUPTA, ADD L. CIT (DR) DATE OF HEARING : 21.12.2017. DATE OF PRONOUNCEMENT : 03.01.2018. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 30.11.2015 OF CIT(A) 13, KOLKATA RELATING TO A.Y.2006-07. 2. THE ASSESSEE IS AN INDIVIDUAL. FOR A.Y.2006-07 T HE ASSESSEE FILED RETURN OF INCOME ON 31.10.2006 DISCLOSING THE TOTAL INCOME OF RS.44,05,020/- WHICH INCLUDED INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN (STC G) OF RS.39,58,972/- ON PURCHASE AND SALE OF SHARES LISTED IN CALCUTTA STOCK EXCHANG E ASSOCIATION LTD. (CSEA). THE DISPUTE IN THIS APPEAL WHICH IS RAISED IN GROUND NO .2 FILED BY THE ASSESSEE IS WITH REFERENCE TO THE SHORT TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON SALE OF EQUITY SHARES OF A COMPANY BY NAME SRINIDHI TRADING LTD. THE ASSESSE E CLAIMED THAT THE AFORESAID SHARES WERE PURCHASED AND SOLD RESULTING IN SHORT TERM CAP ITAL GAIN OF RS.35,52,162/- AS PER THE FOLLOWING DETAILS :- ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 2 NAME OF PURCHASE QUANTITY COST SALE QUANTITY AMOUNT PROFIT/ EQUITY DATE DATE LOSS SRINIDHI 21.04.05 22800 27776/- 23.9.05 11 800 1915494/- 3552162/- 05.05.05 800 10256/- 28.9.05 1800 292500/- 10000 1626200/- 3. IN AN ORDER OF ASSESSMENT U/S 143(3) OF THE ACT DATED 31.12.2008 THE AO CAME TO THE CONCLUSION THAT THE SHORT TERM CAPITAL GAIN ON SALE OF SHARES OF SRINIDHI HAS TO BE TAXED AS FOLLOWS :- (1) PROFIT IN RESPECT OF 800 SHARES OF SHREENIDHI IS T REATED AS SPECULATION PROFIT. (2) PROFIT IN RESPECT OF 1,800 SHARES OF SHREENIDHI IS CONSIDERED AS SHORT TERM CAPITAL GAIN (S.T.T. PAID) AND TAXED U/S 111A, AT SPECIAL R ATE. (3) PROFIT IN BALANCE 21,000 SHARES OF SHREENIDHI IS CO NSIDERED AS SHORT TERM CAPITAL GAIN (NO STT PAID/NOT THROUGH STOCK EXCHANGE) AND T AXED AT NORMAL RATE. 4. IN THIS APPEAL THE ISSUE IS ONLY WITH REGARD TO 21,000 SHARES OF SHREENIDHI WHICH WAS TREATED AS SHORT TERM CAPITAL GAIN BY THE AO BU T WAS TAXED AT A NORMAL RATE. IF SECURITY TRANSACTION TAX (STT) IS PAID, THEN THE SH ORT TERM CAPITAL GAIN IS TAXED AT A CONCESSIONAL RATE. SINCE THERE WAS NO EVIDENCE OF S TT HAVING BEEN PAID, THE AO TREATED THE SHORT TERM CAPITAL GAIN AS LIABLE TO BE TAXED A T A NORMAL RATE AND NOT AT A CONCESSIONAL RATE. 5. THE ORDER OF THE AO WAS CONFIRMED BY THE CIT(A). THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE ITAT AND IN ITA NO.09/KOL/2010 A BE NCH OF KOLKATA VIDE ITS ORDER DATED 11.03.2011, THE TRIBUNAL REMANDED THE ISSUE F OR FRESH CONSIDERATION WITH AN OPPORTUNITY TO PRODUCE EVIDENCE BY THE ASSESSEE BEF ORE THE AO REGARDING PAYMENT OF STT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS O F THE TRIBUNAL : 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT FOR CA LCULATION OF TAX OF SHORT TERM CAPITAL GAINS IN CERTAIN CASES U/S. 111A, THE ASSES SEE HAS TO ESTABLISH THAT HE HAS PAID SECURITIES TRANSACTION TAX. IT IS FURTHER OBSE RVED, AS POINTED OUT BY THE LD. ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 3 CIT(A), THAT IN ORDER TO AVAIL COMPUTATION OF SHORT TERM CAPITAL GAINS U/S.111A, THE TRANSACTIONS ARE TO BE ROUTED THROUGH STOCK EXCHANG E OR IT SHOULD BE ENTERED INTO DEMAT IS NOT A MANDATORY REQUIREMENT. IN THIS CASE, CONTRACT NOTE IS SHOWING THAT THE BROKER HAS COLLECTED SECURITIES TRANSACTION TAX BUT, HOWEVER. THIS SECURITIES TRANSACTION TAX HAS BEEN PAID BY THE BROKER TO THE APPROPRIATE AUTHORITY IS NOT EVIDENT FROM RECORD. THEREFORE IN THE INTEREST OF J USTICE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO REDECIDE THE SAME AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE FURTHER DIRECT THE ASSESSEE TO SUBSTANTIATE THAT SECURITIES TRANSACTION TAX HAS BEEN PAID TO AP PROPRIATE AUTHORITY IN ORDER TO AVOID BENEFIT OF SECTION 111A OF THE ACT. 6. THE AO PASSED AN ORDER OF ASSESSMENT DATED 29.10 .2012 GIVING EFFECT TO THE ABOVE DIRECTIONS OF THE TRIBUNAL. IN THE SAID ORDER THE A O REFERRED TO A LETTER FROM CSEA WHEREIN IT WAS CLAIMED BY THE AO THAT CSEA DENIED A NY TRANSACTIONS HAVING BEEN EXECUTED THROUGH CSEA BY THE ASSESSEE THROUGH ITS B ROKER M/S. RAJENDRA PRASAD SHAH. THE AO, HOWEVER, IN THE SAID ORDER HELD THAT THE A SSESSEE FAILED TO PROVE THE PAYMENT OF STT ON THE TRANSACTION ON SALE OF SHARES OF SHRINID HI AND HE THEREFORE TAXED THE SHORT TERM CAPITAL GAIN ON SALE OF 21,000 SHARES OF SHRIN IDHI AT RS.31,61,584/- AT NORMAL RATE OF TAXATION. 7. THE ASSESSEE WAS AGGRIEVED BY THIS ORDER OF THE AO IN AS MUCH AS THE AO HAD NOT PROVIDED THE ASSESSEE WITH A COPY OF THE COMMUNICAT ION RECEIVED FROM CSEA. THE ASSESSEE FILED A WRIT PETITION BEFORE THE HONBLE C ALCUTTA HIGH COURT IN WP NO.168/2012. THE HONBLE HIGH COURT IN ITS ORDER DATED 11.04.201 2 QUASHED THE ORDER OF ASSESSMENT DATED 29.10.2012 AND DIRECTED THE AO TO FURNISH A C OPY OF THE COMMUNICATION RECEIVED FROM CSEA AND THEREAFTER DECIDE THE ISSUE AFRESH AF TER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD. THE FOLLOWING WERE THE RELEVANT OBS ERVATIONS OF THE HONBLE CALCUTTA HIGH COURT :- RELIANCE ON DOCUMENTS WITHOUT OPPORTUNITY TO AN AS SESSEE TO MAKE SUBMISSIONS ON THE SAME, MOST CERTAINLY CONTRAVENES PRINCIPLES OF NATURAL JUSTICE. THE IMPUGNED ASSESSMENT ORDER CANNOT, THEREFORE, BE SUSTAINED AN D THE SAME IS SET ASIDE AND QUASHED. THE ASSESSING OFFICER SHALL, WITHIN 30 DAYS FROM T HE DATE OF COMMUNICATION OF THIS ORDER PASS AN ORDER OF REASSESSMNENT AFTER GIVING T HE PETITIONER FURTHER OPPORTUNITY ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 4 OF HEARING AND AFTER SUPPLYING THE PETITIONER WITH COPIES OF ALL DOCUMENTS ON WHICH THE ASSESSING OFFICER INTENDS TO PLACE RELIANCE. IT IS MADE CLEAR THAT THE PETITIONER SHALL NOT SELL, TRANSFER, ALIENATE AND/OR DISPOSE O F ANY OF HIS ASSETS, IMMOVABLE OR MOVABLE AND/OR ENCUMBER THE SAME IN THE MEANWHILE. 8. PURSUANT TO THE ORDER OF THE HONBLE CALCUTTA HI GH COURT THE AO FRAMED THE ASSESSMENT BY AN ORDER DATED 28.03.2013. IN THE PRO CEEDINGS BEFORE PASSING THE ORDER DT.28.03.2013, THE AO FURNISHED A COPY OF THE COMM UNICATION DATED 21.03.2013 RECEIVED FROM CSEA. THE SAID COMMUNICATION IS GIVEN AS ANNEXURE TO THIS ORDER . 9. THE AO IN THE IMPUGNED ORDER CONCLUDED THAT THE COMMUNICATION RECEIVED FROM CSEA WAS UNSATISFACTORY AND DID NOT PROVE THE CLAIM OF THE ASSESSEE. ACCORDINGLY SHORT TERM CAPITAL GAIN OF RS.31,65,584/- WAS TAXED AT TH E NORMAL RATE AND NOT AT THE CONCESSIONAL RATE PROVIDED U/S 111A OF THE ACT. 10. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED GROU ND NO.2 BEFORE THE TRIBUNAL WHICH READS AS FOLLOWS :- 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. IN TAXING THE INCOME EARNED FROM THE SHORT TERM CAPITAL GAINS AMOUNTING TO RS.31,61, 584/- AT NORMAL RATE INSTEAD OF SPECIFIED RATE U/S 111A. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. A COPY OF THE COMMUNICATION RECEIVED FROM CSEA GIVEN AS ANNEXURE TO THIS ORDER SHOWS THAT ON 23.09.2005 THE ASSESSEE THROUGH M/S. RAJENDRA PRASAD SHAH HAD SOLD 10,000 EQUITY S HARES OF SHRINIDHI AND A QUANTITY OF 1800 SHARES OF SHRINIDHI. THE COMMUNICATION FURTHER MENTIONS THAT STT PAYMENT FOR THE TRADES WHICH WERE EXECUTED HAVE BEEN PAID. THEREFOR E IT IS CLEAR FROM THIS COMMUNICATION THAT ON THE QUANTITY OF SHARES OF 11, 800 STT HAD BEEN PAID ON SALE OF THESE SHARES BY THE ASSESSEE. OUT OF THIS 800 EQUIT Y SHARES WERE ALREADY CONSIDERED AS SPECULATIVE TRANSACTION BY THE AO AND THIS WAS NOT DISPUTED BY THE ASSESSEE. THEREFORE THE EVIDENCE RECEIVED FROM CSEA SHOWS THAT ON SALE OF 11,000 EQUITY SHARES OF SHRINIDHI THE ASSESSEE HAD PAID STT AND THEREFORE TO THIS EXT ENT THE ASSESSEE IS ENTITLED TO THE ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 5 BENEFIT OF A CONCESSIONAL RATE OF TAX OF SHORT TERM CAPITAL GAIN AS PROVIDED U/S 111A OF THE ACT. AS FAR AS THE REMAINING 10,000 EQUITY SHARES O F SHRINIDHI IS CONCERNED THE COMMUNICATION FROM CSEA SHOWS THAT SINCE THE ORDER NUMBER AND TRADE NUMBER ARE NOT LEGIBLE IN THE INFORMATION PROVIDED BY THE AO THEY ARE UNABLE TO CONFIRM WHETHER THE TRADES WERE DONE BY THE ASSESSEE THROUGH M/S RAJEN DRA PRASAD SHAH. THUS AS FAR AS THE SALE OF 10,000 EQUITY SHARES IS CONCERNED THERE WAS NO EVIDENCE ON RECORD BROUGHT BY THE ASSESSEE EXCEPT THE CONFIRMATION FROM THE BROKER. N O DOUBT IN THE CONTRACT NOTE FOR SALE OF THESE SHARES THERE IS A REFERENCE TO STT HAVING BEEN PAID . THESE CONTRACT NOTES ARE AT PAGES 9 AND 10 OF THE ASSSESSS PAPER BOOK. THE BRO KER NAMELY M/S. RAJENDRA PRASAD SHAH HAS ALSO CONFIRMED IN HIS LETTER TO THE AO DAT ED 19.03.2013 THAT STT WAS PAID ON ALL THE TRANSACTIONS ON SALE OF SHARES OF THE ASSESSEE AND A LEDGER COPY OF THE ASSESSEE IN HIS BOOKS HAS BEEN ANNEXED (COPY AT PAGE 21 TO 23 OF PA PER BOOK). BUT THESE DOCUMENTS WERE AVAILABLE EVEN BEFORE THE TRIBUNAL BUT THE TRI BUNAL FOUND THIS EVIDENCE TO BE INSUFFICIENT. TAKING NOTE OF THE EVIDENCE IN THE FO RM OF LETTER FROM CSEA DATED 21.03.2013 WE ARE OF THE VIEW THAT ON SALE OF 11,00 0 EQUITY SHARES OF SHRINIDHI AND THE SHORT TERM CAPITAL GAIN ARISING ON SUCH SALE THE AS SESSEE WOULD BE ENTITLED TO THE BENEFIT OF CONCESSIONAL RATE OF TAX AS PROVIDED U/S 111A OF TH E ACT. TO THIS EXTENT THE ASSESSEE GETS RELIEF ON GROUND NO.2. ALL OTHER GROUNDS WERE NOT PRESSED FOR ADJUDICATION. 12. IN THE RESULT THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 03.01.2018. SD/- SD/- [DR.A.L.SAINI] [ N.V.V ASUDEVAN ] ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED : 03.01.2018. [RG SR.PS] ITA NO.256/KOL/2016 SRI SHANTILAL VIRA A.Y.2006-07 6 COPY OF THE ORDER FORWARDED TO: 1SHRI SHANTILAL VIRA, 173, MAHATMA GANDHI ROAD, KOL KTA-700007. 2. A.C.I.T., CIRCLE-45, KOLKATA. 3. C.I.T.(A)-13, 4. C.I.T.-15, KOLKAT A. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES