MANISH SHANTILAL SHAH, MUMBAI V. ITO 30(2)(3), MUMBAI

ITA 2841/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3221 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL K. JHALD
• Assessee Lawyers: BHARAT K. PATELLD
• Keywords: Revision of order; Cost of acquisition; Set aside; Capital Gains
• Section: 263; 143(3)

Judgement Text

1 ITA NO.2841/MUM/2019 MANISH SHANTILAL SHAH ASSESSMENT YEAR-2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO. 2841/MUM/2019 ( / ASSESSMENT YEAR: 2015-16) MANISH SHANTILAL SHAH B-53, 5 TH FLOOR, RUSTOMJEE REGAL ADARSH DUGHDALAYA, MALAD(W) MUMBAI-400 064. / VS. I TO - 30(2)(3) C-13, ROOM NO.608, 6 TH FLOOR PRATYAKSHKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. ! ./ ./PAN/GIR NO. AADPS-7733-H ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) ASSESSEE BY : SHRI BHARAT K. PATEL-LD. AR REVENUE BY : SHRI SUNIL K. JHA-LD. DR / DATE OF HEARING : 27/02/2020 / DATE OF PRONOUNCEMENT : 11/03/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THIS APPEAL, THE ASSESSEE CHALLENGES T HE EXERCISE OF REVISIONAL JURISDICTION U/S 263 AS EXERCISED BY LD. PR. COMMISSIONER OF INCOME-TAX-30 (PR. CIT) VIDE ORDER DATED 07/03/2019 . 2 ITA NO.2841/MUM/2019 MANISH SHANTILAL SHAH ASSESSMENT YEAR-2015-16 2. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS ADVAN CED BY BOTH THE REPRESENTATIVES. WE HAVE ALSO GONE THROUGH THE CASE RECORDS AND IMPUGNED ORDER. OUR ADJUDICATION TO THE SUBJECT MAT TER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 UPON PERUSAL OF CASE RECORDS, WE FIND THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ASSESSED FOR YEAR UNDER CON SIDERATION U/S 143(3) ON 11/08/2017 ACCEPTING THE RETURNED INCOME. DURING AS SESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE SOLD 3 9000 SHARES OF A SCRIP NAMELY HPC BIO FOR RS.22.83 LACS AND CLAIMED LONG-T ERM CAPITAL GAINS EXEMPTED U/S 10(38) FOR RS.21.35 LACS. PURSUANT TO INVESTIGATION CARRIED OUT BY DGIT (INVESTIGATION), THE SAID SCRIP WAS LIS TED AMONGST 84 SCRIPS THROUGH WHICH ACCOMMODATION ENTRY OF EXEMPT LONG-TE RM CAPITAL GAINS WAS PROVIDED TO SEVERAL BENEFICIARIES, ASSESSEE BEI NG ONE OF THEM. THE ASSESSEE SUBMITTED THAT IT DECLARED THE SAID GAIN U NDER INCOME DISCLOSURE SCHEME, 2016 FOR TAXATION AND EXEMPTION U/S 10(38) WAS NO MORE APPLICABLE IN THE CASE OF THE ASSESSEE. ACCEPTING T HE SAME, THE ASSESSMENT WAS FRAMED BY LD.AO. 3.2 HOWEVER, LD. PR.CIT, UPON NOTICING THAT ASSESSE E OFFERED INCOME ONLY TO THE EXTENT OF RS.21.35 LACS AS AGAINST SALE CONS IDERATION OF RS.22.83 LACS, SHOW-CAUSED ASSESSEE STATING THAT THE DECLARA TION TO THE EXTENT OF RS.1.48 LACS WAS NOT MADE. IN OTHER WORDS, THE LD. PR.CIT WAS OF THE OPINION THAT THE PURCHASE VALUE OF SHARES OF RS.1.4 8 LACS WAS TO BE DISREGARDED AND ENTIRE SALE PROCEEDS OF PENNY STOCK WAS TO BE ADDED TO THE TOTAL INCOME. 3 ITA NO.2841/MUM/2019 MANISH SHANTILAL SHAH ASSESSMENT YEAR-2015-16 3.3 THE ASSESSEE POINTED OUT THAT CORRECT COST OF S HARES WAS RS.1.40 LACS AS AGAINST SALE PROCEEDS OF RS.22.79 LACS, HOW EVER, IN BOTH THE CASES, THE CAPITAL GAIN WOULD REMAIN AT THE SAME FI GURE I.E. RS.21.35 LACS. THE ASSESSEE DREW ATTENTION TO THE FACT THAT ACQUIS ITION COST OF RS.1.40 LACS WAS PAID FROM ASSESSEES CAPITAL ACCOUNT HELD WITH M/S KING ENTERPRISES. IN SUPPORT, REQUISITE EVIDENCES WERE A DDUCED. THE ATTENTION WAS DRAWN TO THE FACT THAT COST OF RS.1.40 LACS WAS PAID ON 04/03/2013 VIDE CHEQUE NO. 61439 DRAWN ON ICICI BANK. THEREFOR E, THE COMPUTATION OF CAPITAL GAIN WAS CORRECT AND THE PROPOSED ACTION TO TAX THE ENTIRE SALE PROCEEDS WAS UNCALLED FOR. HOWEVER, NOT CONVINCED, LD. PR.CIT OPINED THAT ENTIRE SALE CONSIDERATION WAS TO BE OFFERED AS INCO ME INSTEAD OF LONG-TERM CAPITAL GAINS. FINALLY, TERMING THE ORDER TO BE ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE ORDER WAS SET ASIDE AN D LD. AO WAS DIRECTED TO REFRAME THE ASSESSMENT AFTER PROVIDING PROPER OPPOR TUNITY OF BEING HEARD. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEF ORE US. 4. UPON CAREFUL CONSIDERATION OF DOCUMENTS ON RECOR D, WE FIND THAT THE ASSESSEE HAS SUBSCRIBED TO PUBLIC ISSUE OF HPC BIOS CIENCES LTD. BY PAYING A SUM OF RS.1.40 LACS WHICH WAS DEBITED TO ASSESSEE S CAPITAL ACCOUNT HELD WITH M/S KING ENTERPRISES. THE SAID PAYMENT HA S BEEN CLEARED FROM BANK ACCOUNT ON 07/03/2013. THE SHARES WERE HELD SI NCE 15/03/2013 WHICH IS EVIDENT FROM LONG-TERM CAPITAL GAIN STATEMENT OF ASSESSEES BROKER. IN THE OPINION OF LD. PR.CIT, THE COST OF ACQUISITION WAS ALSO TO BE ADDED TO THE INCOME OF THE ASSESSEE. HOWEVER, UNLESS THE SAID PA YMENT HAS CERTAIN ELEMENT OF UNDISCLOSED INCOME, THE SAME COULD NOT B E SAID TO BE THE 4 ITA NO.2841/MUM/2019 MANISH SHANTILAL SHAH ASSESSMENT YEAR-2015-16 UNDISCLOSED INCOME OF THE ASSESSEE. THE SAID COST O F ACQUISITION HAS BEEN PAID BY THE ASSESSEE IN A PUBLIC ISSUE. THE PAYMENT IS WELL SUPPORTED BY DOCUMENTS ON RECORD. THEREFORE, THERE COULD BE NO O CCASION TO TERM THE ORDER OF LD. AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SEC.263. WE FIND THE IMPUGNED ORDER UNSUSTAINABLE AND THEREFORE, QUASH THE SAME. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/03/2020 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + , $ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.