Shri Ramesh Ratilal Vachhani, Baroda V. The Dy.CIT, Circle-1(1), Baroda

ITA 2935/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8963 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-03-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 11-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S CHOUDHARY
• Assessee Lawyers: M J SHAH
• Keywords: Bogus purchase; Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NOS: 2935 TO 2938/AHD/2013 (ASSESSMENT YEAR: 2004-05) SHRI RAMESHBHAI RATILAL VACHANI 958, GIDC, MAKARPURA, VADODARA- 390011 PAN NO. AAXPV9599C, SHRI VINODBHAI RATILAL VACHHANI 958, GIDC, MAKARPURA, VADODARA- 390011 PAN NO. AAXPV9579N, SHRI JAYANTILAL RATILAL VACHHANI ANALOG & DIGITAL INSTRUMENTATION 962, GIDC, MAKARPURA, VADODARA-390011 PANNO. ABBPV7365F AND SHRI NARENDRA RATILAL VACHHANI 12, VIMAL GANGA SOCIETY, MANJALPUR, VADODARA-390011 PAN NO. AAXPV9601R V/S DY. CIT, CIRCLE-1(1), BARODA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.J. SHAH, AR RESPONDENT BY : SHRI P. S. CHOUDHARY, SR. D. R. ITA NOS. 293 5 TO 2938/AHD/2013 . A.Y. 2004-05 2 ( )/ ORDER DATE OF HEARING : 09 -03-201 7 DATE OF PRONOUNCEMENT : 16-03-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 2935 TO 2938/AHD/2013 ARE APPEALS BY FOUR DIFFERENT ASSESSEES PREFERRED AGAINST FOUR SEPARATE ORDERS OF THE LD. C IT(A)-I, BARODA DATED 24.09.2013 PERTAINING TO A.Y. 2004-05. 2. AS THE UNDERLYING FACTS IN THE CAPTIONED APPEALS AR E IDENTICAL, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. WE HEARD THE RIVAL CONTENTIONS ON THE FACTS OF ITA NO. 2935/AHD/2013. 4. THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REVENUE IS THE CAPITAL GAINS DECLARED BY THE ASSESSEE FROM THE SAL E OF SHARES OF SURYADEEP SALT. THE ALLEGATIONS OF THE A.O., CONFIRMED BY THE LD. CIT(A) ARE- (I) THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN RESPECT OF PURCHASE OF SHARES IN PHYSICAL FORM. (II) THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE IN RELATION TO THE DEMATERIALIZED OF THE SHARES IN THE DEMAT ACCOUNT. (III) ON THE BASIS OF THE INFORMATION RECEIVED BY T HE A.O. IN RESPECT OF CERTAIN SEARCH OPERATION CONDUCTED AT THE PREMISES OF MAHAN AGAR SECURITIES GROUP ITA NOS. 293 5 TO 2938/AHD/2013 . A.Y. 2004-05 3 OF COMPANIES HEADED BY ONE SHRI MUKESH CHOKSI BY WH ICH THE A.O. CAME TO KNOW THAT THE SAID GROUP WAS INDULGED IN PROVIDING ACCOMMODATION BILLS IN RESPECT OF CERTAIN SHARES OF CERTAIN COMPANIES. (IV)THE INTERMEDIARY M/S. GOLD STAR FINVEST PVT. LT D. WAS EXPELLED FROM TRADING MEMBERSHIP OF THE STOCK EXCHANGE WITH EFFEC T FROM 21.06.2004. (V) THE GROUP COMPANIES OF SHRI MUKESH CHOKSI WERE DISCLOSING THEIR INCOME @ 0.15% OF THE TOTAL ENTRIES PROVIDED BY THEM. 5. ON THE BASIS OF ABOVE ALLEGATIONS, THE A.O. CAME TO THE CONCLUSION THAT THE CAPITAL GAINS OFFERED BY THE ASSESSEE REMAINS UNEXP LAINED AND, THEREFORE, THE SAME WAS TREATED UNEXPLAINED CASH CREDIT AND AD DED TO THE INCOME OF THE ASSESSEE. 6. AFTER GIVING A THOUGHTFUL CONSIDERATION TO THE ORDE RS OF THE AUTHORITIES BELOW QUA THE ALLEGATIONS, WE FIND BOTH THE LOWER A UTHORITIES HAVE ACCEPTED THAT THE SHARES WERE PURCHASED ON 03.05.20 02, THOUGH IN PHYSICAL FORM. THIS IS EVIDENT FROM THE CONTRACT NOTE ISSUED BY M/S. GOLD STAR FINVEST PVT. LTD. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE RELATING TO THE PURCHASE OF SH ARES. 7. IT IS ALSO SEEN FROM THE ORDERS OF THE AUTHORITIES BELOW THAT BOTH THE LOWER AUTHORITIES HAVE ACCEPTED THAT THE SHARES WERE DEMA TERIALIZED ON 20.10.2003 WHICH IS EVIDENT FROM THE TRANSACTIONS S TATEMENT OF UTI BANK. THUS, IT IS CLEAR THAT THE EVIDENCE OF DEMATERIALIZ ATION WAS VERY MUCH WITH THE LOWER AUTHORITIES. ITA NOS. 293 5 TO 2938/AHD/2013 . A.Y. 2004-05 4 8. THE NEXT ALLEGATION IS THAT M/S. GOLD STAR FINVEST PVT. LTD. WAS EXPELLED FROM THE TRADING MEMBERSHIP OF THE STOCK EXCHANGE W ITH EFFECT FROM 21.06.2004. BUT AS MENTIONED ELSEWHERE, THE SHARES WERE PURCHASED ON 03.05.2002 AND DEMATERIALIZED ON 30.10.2003 MUCH EA RLIER TO THE DATE OF EXPULSION OF THE INTERMEDIARY M/S. GOLD STAR FINVES T PVT. LTD. 9. IF THE INTERMEDIARY WAS FOUND TO BE PROVIDING ACCOM MODATION ENTRIES THROUGH ISSUE OF BOGUS PURCHASE BILLS, IT CANNOT BE SAID THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES. 10. ON THE OTHER HAND, THE SALE TRANSACTION HAS BEEN DO NE AND IF THE ALLEGATION IS THAT THE SAID COMPANY WAS NON EST THEN HOW COULD THE SHARES OF NON EST COMPANY BE DEMATERIALIZED AND SUBSEQUENTLY SOLD. 11. THERE IS NO DENYING THAT CONSIDERATION WAS PAID WHE N THE SHARES WERE PURCHASED. THE SHARES WERE THEREAFTER SENT TO THE C OMPANY FOR THE TRANSFER OF NAME. THE COMPANY TRANSFERRED THE SHARES IN THE NAME OF THE ASSESSEE. THERE IS NOTHING ON RECORD WHICH COULD SUGGEST THAT THE SHARES WERE NEVER TRANSFERRED IN THE NAME OF THE ASSESSEE. THERE IS A LSO NOTHING ON RECORD TO SUGGEST THAT THE SHARES WERE NEVER WITH THE ASSESSE E. ON THE CONTRARY, THE SHARES WERE THEREAFTER TRANSFERRED TO DEMAT ACCOUNT . THE DEMAT ACCOUNT WAS IN THE NAME OF THE ASSESSEE, FROM WHERE THE SHA RES WERE SOLD. IN OUR UNDERSTANDING OF THE FACTS, IF THE SHARES WERE OF S OME FICTITIOUS COMPANY WHICH WAS NOT LISTED IN THE BOMBAY STOCK EXCHANGE/N ATIONAL STOCK EXCHANGE, THE SHARES COULD NEVER HAVE BEEN TRANSFER RED TO DEMAT ACCOUNT. ITA NOS. 293 5 TO 2938/AHD/2013 . A.Y. 2004-05 5 SHRI MUKESH CHOKSI MAY HAVE BEEN PROVIDING ACCOMMOD ATION ENTRIES TO VARIOUS PERSONS BUT SO FAR AS THE FACTS OF THE CASE IN HAND SUGGEST THAT THE TRANSACTIONS WERE GENUINE AND THEREFORE, NO ADVERSE INFERENCE SHOULD BE DRAWN. 12. IN THE LIGHT OF THE DISCUSSION HEREINABOVE AND ON C ONSIDERATION OF THE FACTS IN TOTALITY, THE CLAIM OF THE ASSESSEE CANNOT BE DE NIED ON THE BASIS OF PRESUMPTION AND SURMISES IN RESPECT OF PENNY STOCK BY DISREGARDING THE DIRECT EVIDENCES ON RECORD RELATING TO THE SALE/PUR CHASE TRANSACTIONS IN SHARES SUPPORTED BY BROKERS CONTRACT NOTES, CONFIR MATION OF RECEIPT OF SALE PROCEEDS THROUGH REGULAR BANKING CHANNELS AND THE D EMAT ACCOUNT. 13. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO TREAT THE SURPLUS ARISING OUT OF THE SALE OF SHA RES AS CAPITAL GAINS. 14. AS MENTIONED ELSEWHERE AND AS AGREED BY THE REPRESE NTATIVES OF BOTH THE SIDES, SINCE THE FACTS ARE COMMON IN ALL THE IMPUGN ED APPEALS, ALL THE APPEALS BY THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 03- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 16 /03/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.