The Assistant Commissioner of Income-tax, Jalandhar V. Sh. Prem Pal Gandhi, Nawanshahr

ITA 264/ASR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5573 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKAR
• Assessee Lawyers: BHAGAT; RAJINDER CHOPRA
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Cost of acquisition; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER (CAMP AT JALANDHAR) I.T.A NO. 264(ASR)/2014 ASSESSMENT YEAR: 2008-09 ASST. CIT, CENTRAL CIRCLE-II, JALANDHAR. VS. SH. PREM PAL GANDHI, C/O K.C. TOWER, CHANDIGARH ROAD, NAWANSHAHR. PAN:AAQPG6508D (APPELLANT) (RESPONDENT) APPELLANT BY: SH. BHAWANI SHANKAR (DR ) RESPONDENT BY: SH. M. R. BHAGAT & SH. RAJINDER CHOPRA (CA) DATE OF HEARING: 29.06.2016 DATE OF PRONO UNCEMENT: 20.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE OR DER OF LEARNED CIT(A), LUDHIANA, DATED 14.02.2014, FOR ASST. YEAR: 2008-09. 2. THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEAR NED CIT(A), BY WHICH HE HAD ALLOWED RELIEF TO THE ASSESSEE TO THE TUNE OF RS.4,11,77,474 WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF DENIAL OF BOGUS LONG TERM CAPITAL GAIN ON SALE OF SHARES. THE REVENUE IS FURTHER AGGRIEVED WITH THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD DELET ED THE ADDITION OF RS.12,59,000/- WHICH THE ASSESSING OFFICER HAD MADE ON ACCOUNT OF UNEXPLAINED CASH RECEIPTS. ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 2 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT A SEARCH TOOK PLACE U/S 132 OF THE ACT AND THE CASE WAS REOPENED U/S 153A OF THE ACT. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD DECLARED LONG TE RM CAPITAL GAIN TO THE TUNE OF RS.4,11,77,474/-. THE ASSESSING OFFICER OBS ERVED ON THE BASIS OF CERTAIN ANSWER TO THE QUESTIONS PUT TO ASSESSEE THA T THE TRANSACTION OF CAPITAL GAIN WAS BOGUS AND THEREFORE, HE MADE THE A DDITION OF THE SAID AMOUNT. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER SEIZED DOCUMENTS 5 & 9 ANNEXURE-A RECEIPTS OF RS.12.59 HAV E NOT BEEN EXPLAINED AND THEREFORE, HE MADE THIS ADDITION ALSO . THE ASSESSING OFFICER FURTHER MADE AN ADDITION OF RS.11,00,000/- ON ACCOUNT OF UNACCOUNTED SOURCES OF CASH FROM WHICH THE ASSESSEE HAD CLAIMED TO HAVE PURCHASED SHARES OF M/S GEEFCEE FINANCE LTD. 4. AGGRIEVED WITH THE ADDITION THE ASSESSEE FILED A PPEAL BEFORE LEARNED CIT(A) AND FILED VARIOUS SUBMISSIONS. THE LEARNED C IT(A) AFTER GOING THROUGH THE SUBMISSIONS & AFTER OBTAINING REMAND RE PORT FROM ASSESSING OFFICER DELETED THE ADDITION OF LONG TERM CAPITAL G AIN BY HOLDING AS UNDER: 12 I HAVE CONSIDERED THE FACTS OF THE CASE, THE BA SIS OF ADDITION MADE BY THE ASSESSING OFFICER, THE ARGUMENTS OF THE AR DURI NG THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS AND THE COMMENTS OF T HE ASSESSING OFFICER IN THE REMAND REPORT. IT IS SEEN THAT THE IMPUGNED PURCHASE OF SHARES ALLEGEDLY EFFECTED IN THE F.Y.2006-07 FOR AN AMOUNT OF RS.LL LAKHS AND THE SAID SHARES HAD BEEN PHYSICALLY TRANSFERRED IN FAVO UR OF THE APPELLANT IN THE BOOKS OF THE LISTED COMPANY NAMELY GEEFCEE FINA NCE LTD. FURTHER THE SAID SHARES GOT DEMATERIALIZED AND WERE, CREDITED I N THE ASSESSEE'S ACCOUNT MAINTAINED WITH DEPOSITORY PARTICIPANT I.E. HDFC ON 16.10.2006. FURTHER, DIVIDEND AMOUNTING TO RS.1,50,000/- HAS BE EN DECLARED AND RECEIVED WITH RESPECT TO AFOREMENTIONED HOLDING OF SHARES ON 23.10.2007 ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 3 AND THE SAID DIVIDEND HAD BEEN DISCLOSED BY THE ASS ESSEE IN THE RETURN OF INCOME AND CLAIMED EXEMPT ACCORDINGLY. IT IS ALSO T O BE NOTED THAT THE SAID DIVIDEND HAD BEEN ACCEPTED AS EXEMPT BY THE ASSESSI NG OFFICER FOR THE YEAR UNDER CONSIDERATION. THE ONLY LOGICAL CONCLUSI ON THAT CAN BE MADE FROM THE SEQUENTIAL PERUSAL OF THE ABOVE DETAILED F ACTS IS THAT THE IMPUGNED SHARES WERE ACTUALLY PURCHASED BY THE ASSE SSEE ON GIVEN DATES AS THESE STAND REFLECTED IN THE D'MAT ACCOUNT MAINT AINED WITH HDFC BANK. THE DIVIDEND DECLARED ON THE SAME HAS BEEN RE CEIVED AND CREDITED IN ASSESSEE'S BANK ACCOUNT WHICH IS FURTHER FOUND R ECORDED IN THE INCOME TAX RETURN AND ALLOWED AS EXEMPT BY THE ASSESSING O FFICER. AS AGAINST THIS CLEAR DOCUMENTARY EVIDENCE IN FAVOUR OF THE AP PELLANT, THE ASSESSING OFFICER HAS MERELY REJECTED THE CONTENTION OF PURC HASE ON THE BASIS OF SUSPICION ARISING OUT OF RECKLESS/CASUAL REPLIES GI VEN TO VARIOUS QUESTIONS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT P ROCEEDINGS. IT IS IMPORTANT TO APPRECIATE HERE THAT THE ASSESSEE HAD BEEN SUBJECTED TO SEARCH AND SEIZURE PROCEEDINGS UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 AND THE SEARCH PROCEEDINGS DID NOT LEAD TO REC OVERY OF ANY INCRIMINATING EVIDENCE TO SHOW THAT THE TRANSACTION OF PURCHASE OF SHARES WAS ARRANGED AS SUSPECTED BY THE ASSESSING OFFICER. IT IS ALSO SEEN THAT NO POST SEARCH ENQUIRIES ON THE ISSUE HAD BEEN COND UCTED IN THE FORM OF RECORDING THE STATEMENT OF BROKER SO AS TO BRING ON RECORD ANY EVIDENCE OF THE SAID TRANSACTION BEING AN ACCOMMODATION ENTRY. THIS IS TO MEAN THAT JUST BECAUSE ASSESSEE HAS BEEN FOUND TO BE EARNING HUGE AMOUNTS OF LONG TERM CAPITAL GAIN ON SALE OF SHARES, THE SAME HAS B EEN HELD TO BE SHAM TRANSACTION MERELY ON THE GROUND OF SAME BEING UNLI KELY IN THE GIVEN CIRCUMSTANCES. THE ASSESSING OFFICER, IN THE REMAND REPORT HAS NOT BEEN ABLE TO CONTRADICT ANY OF THE FACTS REGARDING PURCH ASE OF SHARES HIGHLIGHTED ABOVE OR REGARDING THE SALE OF SHARES A ND HAS NOT PROGRESSED BEYOND THE STAGE OF SUSPICION. IT IS FURTHER SEEN T HAT THE SHARES HAD BEEN SOLD FOR AN AMOUNT OF RS.4,26,59,625/- AND HAS BEEN DEBITED TO ASSESSEE'S D'MAT ACCOUNT MAINTAINED WITH D/P, HDFC. IT IS ALSO SEEN THAT STT HAS BEEN PAID ON THE SALE OF SHARES AND SAID SH ARES HAD BEEN SOLD THROUGH NATIONAL STOCK EXCHANGE. IT IS ALSO SEEN TH AT THE ASSESSING OFFICER WHILE WORKING OUT THE ADDITION HAS ALLOWED INDEXATI ON ON THE COST OF PURCHASE OF SHARES TILL THE DATE OF SALE AND HAS IN FACT WORKED OUT THE CAPITAL GAIN ONLY TO MAKE THE IMPUGNED ADDITION. I AM OF THE VIEW THAT THERE IS NO EVIDENCE ON RECORD, GATHERED DURING THE COURSE OF SEARCH PROCEEDINGS OR DURING THE COURSE OF SEARCH INVESTIG ATION OR ASSESSMENT PROCEEDINGS TO HOLD THE VIEW THAT THE ENTIRE TRANSA CTION OF PURCHASE/SALE OF SHARES EFFECTED OVER A PERIOD OF TWO YEARS WAS A SHAM TRANSACTION. THE ADDITION BEING WITHOUT ANY LOGICAL BASIS IS DIRECTE D TO BE DELETED. 5. THE LEARNED CIT(A) ALSO DELETED THE ADDITION OF RS.11,00,00/- HOLDING THAT THE ADDITION CAN ONLY BE MADE IN ASST. YEAR 2006-07 AND AGAINST WHICH REVENUE HAS NOT FILED ANY APPEAL. ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 4 6. AS REGARDS ADDITION ON ACCOUNT OF RS.12,59,00 0/-, THE LEARNED CIT(A) DELETED THE SAME BY HOLDING AS UNDER: 22. I HAVE CONSIDERED THE BASIS OF ADDITION MADE B Y THE ASSESSING OFFICER AND THE ARGUMENTS OF THE AR ON THE ISSUE AND THE CO MMENTS OF THE ASSESSING OFFICER IN THE REMAND REPORT. IT IS SEEN THAT THE IMPUGNED SEIZED DOCUMENTS HAD BEEN FIRST CONFRONTED TO THE A PPELLANT DURING THE APPELLATE PROCEEDINGS ONLY AS THE COPIES OF THE SAM E WERE GIVEN TO THE ASSESSEE DURING APPELLATE PROCEEDINGS. THE PERUSAL OF THE SEIZED DOCUMENT RECORDS AS UNDER:- ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 5 ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 6 ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 7 THE ASSESSING OFFICER IN THE REMAND REPORT HAS NOT POINTED OUT AS TO HOW THE FIGURE OF 12.59 LACS HAS BEEN WORKED OUT FR OM THE SCRIBBLING RECORDED ON THE GIVEN SEIZED PAPERS. IT HAS ALSO NO T BEEN POINTED OUT AS TO HOW 2/8/26 HAS BEEN READ AS YEAR UNDER CONSID ERATION. FURTHER, IT HAS NOT BEEN POINTED OUT AS TO HOW 2-00 IS TAKEN AS 2 LACS OR 20,000/- OR WHATEVER. THE ENTIRE ADDITION I S ALLEGEDLY BASED UPON THE IMPUGNED SEIZED DOCUMENT BUT THERE IS NO R ELATIONSHIP BETWEEN THE RECORDINGS ON THE SEIZED DOCUMENT AND T HE IMPUGNED ADDITION. IN FACT, THE DATES MENTIONED ON THE IMPUG NED SEIZED DOCUMENTS DO NOT CONVEY ANY MEANING AS IT IS WRITTE N AS 24/25/427 AND AT SOME POINT DATE OF 08/08/07 OR 07/ 03/2008 WITH FIGURE OF 0.70 HAS BEEN WRITTEN. IN THE CIRCUM STANCES, THERE DOES NOT SEEM TO BE ANY LOGICAL BASIS TO CONCLUDE T HAT THE RECORDINGS ON THE IMPUGNED SEIZED DOCUMENT AMOUNT TO EARNING O F UNACCOUNTED INCOME/INVESTMENT BY THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION. THEREFORE, THE ADDITION MADE IS DIRE CTED TO BE DELETED. 7. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, THE LEARNED DR SUBMITTED THAT THE PURCHASE OF SHARES DECLARED BY ASSESSEE WAS BOGUS AND ALSO THE SALES OF SHARES DECLARED BY ASSESSEE WERE BOGUS AS THE SHARES WERE RARELY TRADED AT THE STOCK EXCHANGE AND IN A SHORT PERIOD OF TIME THE VA LUE OF SHARES HAD RISEN UNREASONABLY FROM RS.10/- TO RS.400/- AND THE REFORE, ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION. 9. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED THA T ASSESSEE HAD PURCHASED SHARES IN THE PHYSICAL FORM AND THE SHARE S WERE GOT ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 8 DEMATERIALIZED AND WERE CREDITED TO THE DEMAT ACCO UNT OF ASSESSEE WITH HDFC BANK, THEREFORE, THE ARGUMENTS OF LEARNED DR T HAT THE SHARES WERE BOGUS DO NOT HOLD ANY GROUND. THE LEARNED AR S UBMITTED THAT ASSESSEE HAD RECEIVED DIVIDEND ALSO ON THESE SHARES WHICH IS APPARENT FROM THE FINDINGS OF LEARNED CIT(A) AND HE HEAVILY PLACED HIS RELIANCE ON THE ORDER OF LEARNED CIT(A). 10. WE HEAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. 11. IN RESPECT OF FIRST ISSUE OF DELETION ON ACCOUN T OF LONG TERMS CAPITAL GAIN, WE FIND THAT THE ASSESSEE HAD PURCHASED SHARE S IN THE EARLIER YEAR AS NOTED BY THE LEARNED CIT(A) IN HIS ORDER. FURTHE R THE SHARES WERE GOT DEMATERIALIZED AND THE SAME WERE CREDITED IN THE AC COUNT OF ASSESSEE MAINTAINED WITH HDFC BANK. THE ASSESSEE ALSO RECEIV ED DIVIDEND ON SUCH SHARES ON 23.10.2007 AND SUCH DIVIDEND WAS CLA IMED AS EXEMPT AND ASSESSING OFFICER DID NOT RAISE ANY OBJECTION A GAINST THE CLAIM OF SUCH DIVIDEND. THE LEARNED CIT(A) HAS NOTED IN HIS ORDER THAT IN THE REMAND REPORT ASSESSING OFFICER WAS NOT ABLE TO CON TRADICT ANY OF THE FACTS REGARDING PURCHASE OF SHARES AND REGARDING SA LE OF SHARES. IT IS FURTHER OBSERVED THAT ASSESSEE HAD PAID STT ON THE SALE OF SUCH SHARES AND THIS FACT HAS BEEN NOTED BY LEARNED CIT(A) IN H IS ORDER. FURTHER, WE FIND THAT WHILE MAKING OUT THE ADDITION ON ACCOUNT OF CAPITAL GAIN THE ASSESSING OFFICER HIMSELF GAVE CREDIT TO ASSESSEE F OR INDEXED COST OF ACQUISITION TO THE EXTENT OF RS.11,67,821/- TAKING THE PURCHASE PRICE AT ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 9 RS.11,00,000/-. FURTHER, WE FIND THAT ASSESSEE HAD SOLD SHARES THROUGH NATIONAL STOCK EXCHANGE AS IS NOTED BY LEARNED CIT( A) IN HIS ORDER AT PAGE 18. FURTHERMORE THE PAYMENT FOR SALE OF SHARES WAS RECEIVED THROUGH BANKING CHANNELS. ALL THESE DOCUMENTARY EVI DENCES IN FAVOUR OF THE ASSESSEE WERE REJECTED BY ASSESSING OFFICER MER ELY ON THE BASIS OF SOME CASUAL REPLIES GIVEN BY ASSESSEE TO THE ASSESS ING OFFICER. HOWEVER, THE FACT REMAINS THAT ALL THE DOCUMENTARY EVIDENCES ARE IN FAVOUR OF ASSESSEE AND LEARNED CIT(A) HAS PASSED A VERY REASO NED AND SPEAKING ORDER AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. 12. IN VIEW OF THE ABOVE, GROUND NOS. 1 TO 4 ARE DI SMISSED. 13. AS REGARDS THE DELETION OF ADDITION OF RS.12,59 ,000/-, WE FIND THAT THE THIS ADDITION WAS MADE ON THE BASIS OF CERTAIN SEIZED DOCUMENTS ON WHICH CERTAIN FIGURES WERE MENTIONED. THE LEARNED C IT(A) HAS REPRODUCED SUCH DOCUMENTS IN HIS APPELLATE ORDER AND HAS HELD THAT THE ASSESSING OFFICER HAD NOT POINTED OUT AS TO HOW THE FIGURES H AS BEEN READ OUT BY HIM FOR MAKING ADDITION. THE COPY OF DOCUMENTS AS R EPRODUCED IN THE CIT(A)S ORDER INDICATES AMOUNT AS TO -0-001-80.12- 00 AND THESE FIGURES WRITTEN ON SUCH SEIZED DOCUMENTS DO NOT SHOW ANY ME ANINGFUL SUGGESTION TO ARRIVE AT THE FIGURE OF RS.12,59,000/ - AS ADDITION MADE BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE A DDITION ONLY ON THE BASIS OF SURMISES AND CONJECTURE WHICH IS NOT TENAB LE IN LAW AND LEARNED ITA NO.264 (ASR)/2014 ASST. YEAR: 2008-09 10 CIT(A) HAS RIGHTLY DELETED THE SAME, AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). 14. IN VIEW OF THE ABOVE, GROUND NO. 5 & 6 ARE ALSO DISMISSED. 15. IN NUTSHELL, THE APPEAL FILED BY REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 .07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:20.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY