ACIT, JODHPUR V. Sh. Rajendra Kumar Bohra, JODHPUR

ITA 29/JODH/2011

• Counselvise Citation: 2923314 RSA 2011
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: R R SI NGHVI
• Keywords: Income from undisclosed sources; Search and seizure; Share purchase agreement; Question of law; Cost of acquisition; Accommodation entries
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.K.GUPTA, JUDICIL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 26/JU/2011 ASSESSMENT YEAR: 2005-06 THE ACIT, VS SMT BINDU BOHRA, CIRCLE-3, JODHPUR JODHPUR PAN NO. AAPPB7348R & C..O NO. 25/JU/2011 (IN ITA NO. 26/JU/2011) ASSESSMENT YEAR: 2005-06 SMT BINDU BOHRA, VS THE ACIT, CIRCLE-3, JODHPUR JODHPUR PAN NO. AAPPB348R ITA NO. 29/JU/2011 ASSESSMENT YEAR: 2005-06 THE ACIT, VS SHRI RAJENDRA KUMAR BOHRA, CIRCLE-3, JODHPUR JODHPUR PAN NO. ACJPJ4990P & C..O NO. 27/JU/2011 (IN ITA NO. 29/JU/2011) ASSESSMENT YEAR: 2005-06 SHRI RAJENDRA KUMAR BOHRA, VS THE ACIT, CIRCLE-3, JODHPUR JODHPUR PAN NO. ACJPJ4990P (APPELLANT) (RESPONDENT) 2 APPELLANT BY : SHRI G.R. KOKANI RESPONDENT BY : SHRI R.R. SINGHVI DATE OF HEARING : 26.07.2012 DATE OF PRONOUNCEMENT : 26.07.2012 ORDER PER N.K.SAINI, A.M. THE APPEALS BY THE DEPARTMENT AND CROSS OBJECTIONS BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 29.01.2009 OF CIT(A) JODHPUR. 2. SINCE THE ISSUE INVOLVED IN THE APPEALS AND CROS S OBJECTIONS ARE SIMILAR, THEREFORE, THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE SHALL DEAL WITH THE APPEALS OF THE DEPA RTMENT. IN BOTH THE APPEALS, COMMON GROUND HAS BEEN RAISED, WHICH READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN TREATING INCOME FROM OTHER SOURCES AS CAPITAL GAIN . 4. THE FACTS AS EMERGING FROM THE ORDERS OF THE AUT HORITIES BELOW IN THE CASE OF SMT. BINDU BOHRA IN ITA NO. 26/JU/2011 ARE THAT THE ASSESSEE DERIVED INCOME FROM BUSINESS OF MANUFACTURING OF JALJEERA A ND CHURAN UNDER THE NAME AND STYLE OF M/S PARAG POUCHES, PROFIT ON SALE S OF THE COMMODITIES THROUGH THE ADHAT / COMMISSION AGENTS AND OTHER INC OME OF INTEREST. THE RETURN OF INCOME WAS FILED ON 30.7.2005 WHICH WAS P ROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO A S THE ACT IN SHORT] ON 3 29.12.2005. A SEARCH AND SEIZURE OPERATION WAS CON DUCTED AT JAIPUR BY INVESTIGATION WING, JAIPUR ON 12.4.2005 IN THE CASE OF M/S B.C. PUROHIT & CO GROUP. THE ADDL. DIT(INV), JAIPUR HAD SENT A LIST OF SUCH PERSONS WHOM ACCOMMODATION ENTRIES WERE PROVIDED BY M/S B.C. PUR OHIT & CO., TO THE ASSESSING OFFICER WHO INITIATED PROCEEDINGS U/S 148 FOR THE FINANCIAL YEAR 2002-03. DURING THE COURSE OF PROCEEDINGS U/S 148 / 147 OF THE ACT, THE ASSESSEE REPLIED THAT THE SAID SHARES WERE SOLD FOR FINANCIAL YEAR PERTAINING TO ASSESSMENT YEAR 2005-06 AND THE INCOME FROM THE SHARES MUST BE CHARGED IN THE RELEVANT ASSESSMENT YEAR. THE PROCEEDINGS F OR THE ASSESSMENT YEAR 2003-04 WAS, THEREFORE, DROPPED AND THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 WAS REOPENED SO THAT THE INCOME ESCAPING AS SESSMENT COULD BE BROUGHT TO TAX. THE ASSESSING OFFICER AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE SHARES OF M/S BOLTON PROPERTIES LTD WERE SOLD FOR RS. 96.827/- BY THE ASSESSEE AND THUS THE INCOM E BEING INCOME FROM UNDISCLOSED SOURCES WAS THE INCOME WHICH ESCAPED AS SESSMENT. ACCORDINGLY, AFTER RECORDING THE REASONS TO BELIEVE, THE ASSESS ING OFFICER HAD ISSUED NOTICE U/S 148 OF THE ACT ON 5.12.2007 AND COMPLETE D THE ASSESSMENT U/S 143(3) READ WITH SECTION 148 OF THE ACT ON 22.12.20 08 DETERMINING THE TOTAL INCOME AT RS. 5,74,599/-. THE ASSESSING OFFICER WH ILE FRAMING THE ASSESSMENT HELD THAT ASSESSEE DID NOT HAVE ANY ACTU AL INCOME FROM CAPITAL GAIN AND IT WAS ONLY A BOGUS LONG TERM CAPITAL GAIN WHICH WAS ARRANGED TO REDUCE THE INCIDENCE OF TAXES. 5. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND SUBMITTED THAT THE AMOUNT ARRIVED BY THE ASSESSING OFFICER WAS WITHOUT DEDUCTING OF COST OF ACQUISITION OF EXPENSES OF SALE AND DO NOT FOUND TO BE CORRECT BECAUSE THE 4 ACTUAL INCOME CLAIMED UNDER THE HEAD LONG TERM CAP ITAL GAIN IN RESPECT OF SHARES OF M/S BOLTON PROPERTIES LTD WAS RS. 85,951/ -, THEREFORE, THE WORKING OF AMOUNT OF RS. 96,827/- AT THE TOTAL SALE PRICE ( WITHOUT DEDUCTION OF COST OF ACQUISITION FO RS. 10,850/- AND EXPENSES OF RS. 26 /-) AT NO STRETCH OF IMAGINATION CAN BE HELD AS CORRECT. IT WAS FURTHER SUBMITTED THAT WHILE MAKING THE ADDITION TO THE TAXABLE INCOME, THE OBSE RVATIONS OF THE ASSESSING OFFICER THAT THE ENTIRE AMOUNT OF PURCHASE AND SALE S WERE ACCOMMODATION ENTRIES TO THE CAPITAL GAIN THROUGH M/S B.C. PUROHI T & COMPANY DID NOT FIND TO BE CORRECT AND WELL BASED. IT WAS CONTENDED THAT THERE WAS NO IOTA OF ANY FACT OF HAVING ANY NEXUS WITH THE ASSESSEES CLAIM AND THE ALLEGED ACCOMMODATION ENTRIES AND SIMPLY BECAUSE THE NAMES OF THE ASSESSEE WAS FOUND IN THE RECORDS OF SHARE HOLDERS AVAILABLE WIT H THE SAID M/S B.C. PUROHIT & CO, ONLY THIS FACT COULD NOT HAVE BEEN A CONCLUSI VE PROOF OF ALLEGED ACCOMMODATION ENTRIES ACTUALLY RELATED TO THE ASSES SEE, THEREFORE, THE CLAIM OF LONG TERM CAPITAL GAIN WAS AN APPARENT AND REAL WHICH CAN NOT BE TREATED AS OTHERWISE. IT WAS CONTENDED THAT THE SHARES PURCHA SED BY THE ASSESSEE LISTED / QUOTED IN THE RECOGNIZED STOCK EXCHANGE AND WERE PU RCHASED THROUGH REGISTERED BROKERS, DULY APPROVED BY STOCK EXCHANGE AND THE RATE ON WHICH SHARES WERE PURCHASED WERE VERIFIABLE FROM THE RATE S QUOTED AT THE STOCK EXCHANGE. THE PAYMENT OF PURCHASE PRICE WAS MADE B Y ACCOUNT PAYEE CHEQUE AND THE SHARES WERE DULY TRANSFERRED IN FAVOUR OF T HE ASSESSEE IN HIS D.MAT ACCOUNT. THOSE SHARES WERE HELD AND POSSESSED BY TH E ASSESSEE FOR MORE THAN 12 MONTHS. THE SHARES SOLD BY THE ASSESSEE WERE SO LD THROUGH REGISTERED BROKERS DULY APPROVED BY SEBI AND THE STOCK EXCHANG E. IT WAS FURTHER STATED THAT THE SALE PRICE WAS RECEIVED FORM THE SAID REGI STERED BROKER BY ACCOUNT PAYEE CHEQUE / BANK DRAFT, THE SHARES SOLD BY THE A SSESSEE WERE DULY 5 TRANSFERRED FROM HER D.MAT ACCOUNT IN FAVOUR OF THE TRANSFEREE THROUGH THE REGISTERED BROKER AND THE ENTIRE TRANSACTIONS OF PU RCHASE AND SALE OF SHARES WERE DULY SUPPORTED BY THE BROKERS CONTRACT NOTES, BILL FOR PURCHASE AND SALES OF SHARES ISSUED BY APPROVED STOCK BROKER. IT WAS STATED THAT ALL THE AFORESAID FACTS AND EVIDENCE WERE DULY FURNISHED BE FORE THE ASSESSING OFFICER, WHO NEVER QUESTIONED NONE OF THE DOCUMENT OR HELD THE SALE DOCUMENT AS FABRICATED OR NON-GENUINE, THEREFORE, T HE TRANSACTIONS OF SHARES COULD NOT BE A COLORABLE OR SHAM OR BOGUS. THE RELI ANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. STATE OF KERALA VS M.M .MATHEW (42 STC 348) 2. CIT VS R.Y.DURLABHJI (211 ITR 178) (RAJ.) 3. CIT VS B.M. KHARWAR (1969) 72 ITR 603((SC) 4. ACIT VS SWAPAN KR. BISWAL (ITA NO.121/KOL/2008 ) ORDER DATED 25.6.2008 6. THE LD CIT(A) AFTER HEARING THE SUBMISSIONS OF T HE ASSESSEE OBSERVED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FILED COPY OF CONTRACT NOTE ISSUED BY PRAKASH NAHATA & CO WHICH S HOWS THAT THE ASSESSEE HAD PURCHASED 250 SHARES OF BOLTON PROPERTIES LTD A T THE RATE OF 43.35 PER SHARE ON 25.3.2003 FOR TOTAL CONSIDERATION OF RS. 1 0,850/- AND MADE THE PAYMENT THROUGH CHEQUE FORM SAVING BANK ACCOUNT NO. 8906 WITH UNION BANK OF INDIA, JODHPUR. HE FURTHER OBSERVED THAT T HE ASSESSEE ALSO FILED COPY OF TRANSACTION STATEMENT ISSUED BY STOCK HOLDING CO RPORATION OF INDIA LTD WHEREIN THE ASSESSEE WAS HAVING D.MAT ACCOUNT WHICH CLEARLY SHOWS THAT THE ASSESSEE PURCHASED 250 SHARES ON 25.3.2003 THROUGH M/S PRAKASH NAHATA & CO FOR TOTAL CONSIDERATION OF RS. 96,900/- AT RS. 3 88/- PER SHARE, THOUGH SALE 6 PROCEEDS WERE RECEIVED BY CHEQUE AND DEPOSITED IN THE SAVING BANK ACCOUNT MAINTAINED WITH UNION BANK OF INDIA AND WAS CLEARE D ON 16.2.2005. THE LD CIT(A) OBSERVED THAT THE ASSESSEE GENUINELY HAD EN TERED INTO PURCHASE AND SALE OF 250 SHARES OF M/S BOLTON PROPERTIES LTD AN D HAD EARNED CAPITAL GAIN THEREON AND THE ASSESSING OFFICER HAD NOT BROUGHT O N RECORD ANY DOCUMENTARY EVIDENCE TO SUGGEST THAT THE NAME OF THE ASSESSEE W AS APPEARING IN THE REGISTER SEIZED FROM PREMISES OF M/S B.C.PUROHIT A ND COMPANY AND WHY THE ASSESSING OFFICER HAD NOT SUPPLIED COPY OF THE SEIZ ED DOCUMENTS AND STATEMENT IF THOSE SUGGEST INVOLVEMENT OF THE ASSES SEE IN GIVING CASH FOR TAKING SALE PROCEEDS OF THE SHARES. THE LD CIT(A) OBSERVED THAT THERE WAS NO IOTA OF EVIDENCE WHETHER DIRECT OR INDIRECT TO PRO VE THAT ANY CASH FOR UNACCOUNTED MONEY HAD FLOWN FROM THE ASSESSEE TO SE LLER OF THE SHARE OR BUYER OF THE SHARE OR TO THE BROKERS OR TO ANY ONE CONNECTED WITH BUYER, SELLER OR BROKER AND NO CASH AMOUNT HAD FLOWN FROM THE ASSESSEE NOR THERE WAS ANY EVIDENCE THAT ASSESSEE EVER GAVE ANY CASH O R UNACCOUNTED MONEY TO ANY ONE IN RELATION TO THE TRANSACTION OF THE SHARE S IN QUESTION. HE, THEREFORE, HELD THAT THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDING THAT SALE PROCEEDS OF SALE OF 250 SHARES OF M/S BOLTON PROPERTIES PVT LTD WAS SHAM OR BOGUS AND IN ASSESSING THE SALE PROCEEDS UNDER THE HEAD INCO ME FROM OTHER SOURCES. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S TATED THAT THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF THE HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT V SMT. PUSHPA MALPANI (2011) 49 DTR (RAJ) 312. THE COPY OF THE SAID ORDER WAS FURNISHED. 7 8. THE LD DR ALTHOUGH SUPPORTED THE ASSESSMENT ORDE R PASSED BY THE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE AFO RESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IT IS NOTICED THAT ON A SIMILAR ISSUE, THE HON'BLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS SMT PUSHPA MALPANI (SUPRA), HAS HELD AS UNDER:- WHETHER OR NOT THERE WAS SALE OF SHARES AND RECEIPT OF CONSIDERATION THEREOF ON APPRECIATED VALUE IS ESSEN TIALLY A QUESTION OF FACT. CIT(A) AND TRIBUNAL HAVE BOTH GIVEN REASONS IN SUPPORT OF THEIR FINDINGS AND HAVE FOUND THAT THE TIME OF TRANSACTIONS, THE BROKER IN QUESTION WA S NOT BANNED BY SEBI AND THAT ASSESSEE HAD PRODUCED COPIE S OF PURCHASE BILLS, CONTRACT NUMBER SHARE CERTIFICAT E, APPLICATIONS FOR TRANSFER OF SHARE CERTIFICATE TO D EMAT ACCOUNT ALONG WITH COPIES OF HOLDING STATEMENT IN D EMAT ACCOUNT, BALANCE SHEET AS ON 31 ST MARCH, 2003, SALE BILL, BANK ACCOUNT, DEMAT ACCOUNT AND OFFICIAL REPORT AND QUOTATIONS OF CALCUTTA STOCK EXCHANGE ASSOCIATION L TD. ON 23 RD JULY 2003. THEREFORE, THE PRESENT APPEAL DOES NOT RAISE ANY QUESTION OF LAW, MUCH LESS ANY SUBSTA NTIAL QUESTION OF LAW. 10. IN THE PRESENT CASE ALSO, THE ASSESSEE PRODUCED COPIES OF PURCHASE BILLS, CONTRACT NUMBERS, SHARES CERTIFICATES, APPLICATION FOR TRANSFER OF SHARE CERTIFICATE TO D.MAT ACCOUNT ALONG WITH COPIES OF H OLDINGS, STATEMENTS IN D.MAT ACCOUNT, SALE DEEDS, PAYEE ACCOUNT CHEQUES AN D THE LD CIT(A) AFTER VERIFYING THOSE DOCUMENTS HELD THAT THE TRANSACTIO NS WAS NOT SHAM OR BOGUS, 8 THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD CIT(A) WHO RIGHTLY DIRECTED THE ASSESSING OFFICER TO TREAT THE SALE CO NSIDERATION OF SHARES AS LONG TERM CAPITAL GAIN INSTEAD OF INCOME FROM OTHER SOURCES. 11. THE FACTS OF THE CASE OF SHRI RAJENDRA KUMAR BO HRA IN ITA NO.29/JU/2011 ARE IDENTICAL TO THE FACTS INVOLVED I N THE CASE OF SMT. BINDU BOHRA (SUPRA), WHICH WE HAVE ALREADY ADJUDICATED IN THE FORMER PART OF THIS ORDER. THEREFORE, OUR FINDINGS GIVEN THEREIN SHALL APPLY MUTATIS-MUTANDIS. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 12. AS REGARDS TO THE CROSS OBJECTIONS FILED BY THE ASSESSEES ARE CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE STATED AT BAR THAT HE HAS INSTRUCTIONS NOT TO PRESS THE CROSS OBJECTIONS AND GAVE IN WRITING CRO SS OBJECTIONS NOT PRESSED, THEREFORE, THE CROSS OBJECTIONS OF BOTH THE ASSESSEES ARE DISMISSED AS NOT PRESSED. 13. IN THE RESULT, THE APPEALS OF THE DEPARTMENT A ND CROSS OBJECTIONS OF THE ASSESSEES ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26.07.2 012) SD/- SD/- (R.K.GUPTA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 26 TH JULY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 9 BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR