ACIT, JODHPUR V. Smt. Radha Boob, JODHPUR

ITA 318/JODH/2013

• Counselvise Citation: 31823314 RSA 2013
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-10-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: K K BOOB
• Keywords: Document seized; Documents seized; Reassessment proceedings
• Section: 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 318/JU/2013 A.Y: 2005-06 THE A.C.I.T. VS. SMT. RADHA BOOB CIRCLE 3 W/O SHRI KAMAL KISHORE BOOB JODHPUR 4-J-24, PRATAP NAGAR, JODHPUR PAN NO. AFRPB 3742 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.K. BOOB DEPARTMENT BY : SHRI N.A. JOSHI DATE OF HEARING : 23.10.2013 DATE OF PRONOUNCEMENT : 24.10.2013 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER OF THE CIT(A), JODHPUR, DATED 01. 03.2013 FOR A.Y 2005-06. 2 2. THE SOLE GROUND RAISED IN THIS APPEAL IS REGARDI NG TRADING INCOME OF RS. 11,07,548/- AS LONG TERM CAPI TAL GAINS [LTCG] EARNED ON SHARED TRANSACTION. 3. BRIEFLY STATED, THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME [ROI] ON 1.8.2 005 DECLARING TOTAL INCOME OF RS. 6,18,926/-. ASSESSME NT WAS COMPLETED AT RETURNED INCOME. SUBSEQUENTLY, ORDER WAS REOPENED U/S 147 R.W.S 148 OF THE INCOME-TAX ACT, 1 961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT]. THE ASSESSEE HAD EARNED LTCG OF RS. 11,07,548/- FROM SA LE OF SHARES OF RAM KRISHNA FIN CAP. THE ASSESSEE HAS AL SO MADE A CLAIM U/S 10(33) OF THE ACT. THE A.O. OBTAI NED INFORMATION FROM SEBI THAT THE BROKER M/S PRAKASH N AHATA & CO. WAS SUSPENDED FROM DEALING IN SHARES BY CSE W .E.F 2.5.2005 ON ACCOUNT OF NON-COMPLIANCE OF UNIQUE CLI ENT CODE THROUGH THIS BROKER. THESE SHARES WERE PURCHA SED ON 3.7.2003 AND WERE CREDITED IN THE DEMAT ACCOUNT OF THE ASSESSEE ON 2.1.2004, I.E. AFTER A PERIOD OF FIVE M ONTHS. THEREFORE, THE A.O. DOUBTED THE ACTUAL DATE OF 3 TRANSACTION. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE A.O ASKED FROM THE ASSESSEE DETAILS OF SHARE TRANSACTIONS AND REASONS OF HER CLAIM OF LTCG. SHE REPLIED THAT THE SHARES WERE PURCHASED THROUGH REGI STERED SHARE BROKER AND THE PAYMENTS WERE MADE THROUGH ACC OUNT PAYEE CHEQUES. THE BROKER DELIVERED THESE SHARES A S PER SEBI AND STOCK EXCHANGE RULES. SHE ALSO FURNISHED C OPY OF DEMAT ACCOUNT. SHE STATED THAT THE SHARES WERE HEL D IN DMAT ACCOUNT FOR SUBSTANTIAL PERIOD AND THEREAFTER SHE SOLD THEM AND THE SALE PROCEEDS WERE RECEIVED THROU GH ACCOUNT PAYEE CHEQUES. ON THE BASIS OF THE FACTS R EVEALED DURING SEARCH PROCEEDINGS CONDUCTED IN THE CASE OF THIRD PARTY, NAMELY, M/S B.C. PUROHIT & CO. U/S 132 OF TH E ACT, THAT CERTAIN SHARE BROKERS REGISTERED WITH CALCUTTA STOCK EXCHANGE WERE ENGAGED IN THE BOGUS TRANSACTIONS IN SHARES OF CERTAIN COMPANIES AND THAT M/S PRAKASH CHAND NAH ATA WAS ALSO ONE OF THEM AGAINST WHICH THE SEBI HAD INI TIATED ENQUIRY FOR HIS TRADE IN THE SHARES OF THE COMPANIE S. ON THAT ASSUMPTION AND PRESUMPTION, AFTER DISCUSSING T HE CHARACTER OF SUCH TRANSACTIONS, THE A.O. HAS FINALL Y 4 REJECTED THE CLAIM OF THE ASSESSEE AND MADE ADDITIO N OF RS. 11,07,548/- IN ASSESSEES INCOME OF THE YEAR. AGGRIEVED, THE ASSESSEE FILED APPEAL AND THE LD. CI T(A) APPROVED REASSESSMENT PROCEEDINGS WHICH WERE ALSO CHALLENGED BEFORE HIM. ON MERITS, HE HAS FOUND THA T THE TRANSPORTATION OF SALE OF SHARES BY THE ASSESSEE TANTAMOUNT TO LTCG. HE HAS GIVEN THE FOLLOWING REA SONS TO COME TO THE ABOVE CONCLUSION: 4.4.1. THE APPELLANT SUBMITTED HER RETURN OF INCOM E DECLARING TOTAL INCOME OF RS. 6,18,926/- INCLUSIVE OF LONG TERM CAPITAL GAIN ON SALE OF SHARES. THE ASSES SING OFFICER HELD THAT THE LONG-TERM CAPITAL GAINS SHOWN BY THE ASSESSEE IS SUSPICIOUS IN NATURE AND THE ASSESS EE HAS ADOPTED A COLOURABLE DEVICE UNDER THE GARB OF TAX PLANNING. THE AO HAS GIVEN A REFERENCE OF PROCEEDIN GS OF SEARCH UNDER SEC.132 CONDUCTED AT THE PREMISES O F M/S. B. C. PUROHIT & CO. AND HAS OBSERVED THAT SOME SHARE BROKERS REGISTERED WITH CALCUTTA STOCK EXCHAN GE WERE ENGAGED IN THE BOGUS TRANSACTIONS IN SHARES OF CERTAIN COMPANIES. THE ASSESSING OFFICER ACCORDINGL Y, ASSESSED THE SAID AMOUNT OF CAPITAL GAIN AS INCOME LIABLE TO TAX UNDER THE HEAD 'INCOME FROM OTHER 5 SOURCES', AS AGAINST INCOME FROM LONG-TERM CAPITAL GAINS SHOWN BY THE ASSESSEE. I FIND THAT THERE IS NO MEN TION THAT THERE IS NOT AN IOTA OF EVIDENCE ON RECORDS TO PROVE THAT THE TRANSACTIONS IN SHARES CARRIED OUT BY THE ASSESSEE WERE SPECIFICALLY MENTIONED IN ANY OF THE DOCUMENTS BROUGHT ON RECORDS IN THE APPELLANT'S CAS E. I FIND THAT THE SHARES PURCHASED BY THE APPELLANT WER E LISTED/QUOTED SHARES IN THE RECOGNIZED STOCK EXCHAN GE. THE SHARES WERE PURCHASED THROUGH REGISTERED BROKER S DULY APPROVED BY THE STOCK EXCHANGE. THE RATE ON WH ICH SHARES WERE PURCHASED ARE VERIFIABLE FROM THE RATES QUOTED AT THE STOCK EXCHANGE. THE PAYMENT OF PURCHA SE PRICE WAS MADE BY ACCOUNT PAYEE CHEQUE. THE SHARES WERE DULY TRANSFERRED IN FAVOUR OF THE ASSESSEE IN HER D- MAT ACCOUNT. THESE SHARES WERE HELD, OWNED AND POSSESSED BY THE ASSESSEE FOR MORE THAN 12 MONTH. T HE SHARES SOLD BY THE ASSESSEE WERE SOLD THROUGH REGIS TERED BROKERS, DULY APPROVED BY SEBI AND THE STOCK EXCHAN GE THE SALE PRICE WAS RECEIVED FROM THE SAID REGISTERE D BROKER BY ACCOUNT PAYEE BANK DRAFT/ACCOUNT PAYEE CHEQUE. THE SHARES SOLD BY THE ASSESSEE WERE DULY TRANSFERRED FROM HER D-MAT ACCOUNT IN FAVOUR OF THE TRANSFEREE THROUGH THE REGISTERED BROKER. THE ENTIR E TRANSACTIONS OF PURCHASE AND SALE OF SHARES WERE DU LY SUPPORTED BY BROKERS CONTRACT NOTES, BILLS FOR PURC HASE AND SALES OF SHARES ISSUED BY THE APPROVED STOCKBRO KERS. 6 4.4.2. FROM THE COPY OF CONTRACT NOTE ISSUED BY PRA KASH NAHATA & CO. WHICH SHOWS THAT THE APPELLANT HAD SOL D SHARES OF RAM KRISHNA FIN CAP ON 19-7-2004, 20-7-20 04 AND 16-12-2004 FOR RS. 2,86,740/-, RS. 2,88,540/- A ND RS. 5,75,400/- RESPECTIVELY AND FURTHER PURCHASE SH ARES OF RS. 42,700/- OF SAME COMPANY. ON PERUSAL OF THE VARIOUS DETAILS FURNISHED BY THE APPELLANT, I FIND THAT THE APPELLANT GENUINELY HAD ENTERED INTO PURCHASE A ND SALE OF SHARES OF M/S. RAM KRISHNA FIN CAP. THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY DOCUMENTARY EVIDENCES TO SUGGEST THAT NAME OF THE APPELLANT IS APPEARING IN THE REGISTER SEIZED FROM PREMISES OF B. C. PUROHIT & CO. HE ALSO NOT BROUGHT IN THE ASSESSMENT ORDER AS WHAT ARE THE QUESTIONS AND ANSWERS IN RESPECT OF PURCHASE AND SALE OF SHARES B Y THE APPELLANT THROUGH SHARE BROKER M/S. PRAKASH NAHATA & CO. ON WHAT DATE THE APPELLANT HAD GIVEN CASH TO BR ING IT BACK AS SALE PROCEEDS? TO WHOM IT WAS GIVEN, WHETHER ANY ENTRY TO THE EFFECT OF RECEIVING CASH F ROM THE APPELLANT WAS AVAILABLE IN THE BOOKS OF B. C. P UROHIT AND CO.? WHY THE ASSESSING OFFICER HAS NOT SUPPLIE D COPY OF THE SEIZED DOCUMENTS AND STATEMENT IF THESE DOCUMENTS AND STATEMENTS SUGGEST INVOLVEMENT OF THE APPELLANT IN GIVING CASH FOR TAKING SALE PROCEEDS O F THE SHARES? THE ASSESSING OFFICER HAS JUST REPRODUCED AN OBSERVATION WHICH MAY BE TRUE IN RESPECT OF SOME OF THE 7 CASES WHO ACTUALLY INDULGED IN TAKING LONG TERM CAP ITAL GAIN BY GIVING CASH. IT IS NOT NECESSARY THAT EVERY PERSON WHO MAKES PURCHASE AND SALE SHARES OF COMPANIES WHOSE PRICES ARE ABNORMALLY FLUCTUATING EVERY DAY H AVE INDULGED IN BUYING OF BOGUS PROFIT. THERE CAN BE A GENUINE PERSON WHO ENTERS IN THE MARKET AT SMALL LE VEL AND HE MAY EARN A SUBSTANTIAL PROFIT IN SHORT SPAN OF TIME. 4.4.3. THE ASSESSING OFFICER HAS NOT SUPPLIED COPY OF ANY MATERIAL, STATEMENT OR EVIDENCE ADMISSIBLE IN L AW TO THE APPELLANT TO PROVE THAT THE AFORESAID TRANSACTIONS OF SHARES CARRIED OUT BY THE ASSESSEE WERE NOT REAL. A REFERENCE OF PROCEEDINGS OF SEARCH CONDUCTED AT THE PREMISES OF M/S. B. C. PUROHIT & C O. WITHOUT CONTAINING ANY SPECIFIC OR DIRECT MATERIAL IN RELATION TO THE AFORESAID TRANSACTIONS OF SHARES CA RRIED OUT BY THE APPELLANT AND WITHOUT PRODUCING ANY PERS ON FOR CROSS EXAMINATION BY THE APPELLANT, CANNOT BE M ADE A VALID BASIS FOR ANY SUCH ADDITION OF ALLEGED INCO ME FROM OTHER SOURCES. 4.4.4 THERE IS NO IOTA OF EVIDENCE, WHETHER DIRECT OR INDIRECT, TO PROVE THAT ANY CASH OR UNACCOUNTED MON EY HAD FLOWN FROM THE ASSESSEE TO THE SELLER OF THE SH ARE, TO THE BUYER OF THE SHARES OR TO THE BROKERS OR TO 8 ANYONE CONNECTED WITH, BUYER, SELLER OR BROKER. NO CASH AMOUNT HAD FLOWN FROM THE ASSESSEE NOR THERE WAS AN Y EVIDENCE THAT THE ASSESSEE EVER GAVE ANY CASH OR UNACCOUNTED MONEY TO ANY ONE IN RELATION TO THE TRANSACTIONS OF SHARES IN QUESTION. 4.4.5. IT IS FURTHER OBSERVED THAT ONUS IS ON THE DEPARTMENT TO PROVE WITH THE DOCUMENTARY EVIDENCE THAT THE TRANSACTIONS ENTERED INTO BY THE APPELLANT ARE NOT GENUINE AND WHAT IS APPARENT IS NOT SUBSTANTIAL . EXCEPT NARRATING A MODUS OPERANDI WHICH MAY BE TRUE IN SOME CASES IN THE ASSESSMENT ORDER OF THE APPELLANT 'S CASE, WITHOUT SUBSTANTIATING BY DOCUMENTARY EVIDENC ES, THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDING TH AT SALE PROCEEDS ON SALE OF SHARES OF M/S RAM KRISHNA FIN CAP. WERE BOGUS. 4.4.6. AS REGARDS, THE APPELLANT SUBMISSION THAT TH E ASSESSING OFFICER WRONGLY MENTIONED DIFFERENT FIGUR ES IN SALE AMOUNT IN COLUMN (A) RS. 2,86,740/- AND IN THI RD LINE OF PAGE NO. 2 MENTIONED RS. 2,85,740/-. IN TH IS REGARD THE ASSESSING OFFICER IS DIRECTED TO CHECK A ND VERIFY THE FIGURES AND CORRECT ACCORDINGLY. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN TREATING SALE PROCEEDS OF RS. 9 11,07,548/- AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER IS DIRECTED TO TREAT SAME AS LONG TERM CAPITAL GAIN EARNED ON SHARE TRANSACTION. THE GROU ND NO. (1) IS ALLOWED. NOW THE REVENUE IS AGGRIEVED AND HAS FILED THIS APP EAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. B OTH THE PARTIES HAVE REITERATED THEIR ARGUMENTS WHICH WERE TAKEN BEFORE THE LD. CIT(A). AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAVE FOUND IT FOR A FACT THAT THE A SSESSEE HAD DISCLOSED INCOME FROM SALE OF SHARES AS LTCG. THE A.O. HAS NOT ALLOWED THIS CLAIM ONLY ON SUSPICION B ASED ON A SEARCH CONDUCTED IN THE CASE OF A THIRD PARTY AND NONE OF THE EVIDENCE FOUND THEREIN WERE CONTRADICTED TO HER BY THE DEPARTMENT. THE SHARES PURCHASED BY THE ASSESS EE WERE LISTED/QUOTED SHARES IN THE RECOGNIZED STOCK EXCHANGE. SHARES WERE PURCHASED THROUGH REGISTERED BROKERS, DULY APPROVED BY THE STOCK EXCHANGE AT THA T PARTICULAR TIME. RATE OF PURCHASE ARE VERIFIABLE F ROM THE 10 RATES QUOTED AT STOCK EXCHANGE. PAYMENT OF PURCHAS E PRICE WAS MADE THROUGH ACCOUNT PAYEE CHEQUES. SHAR ES WERE DULY TRANSFERRED IN FAVOUR OF THE ASSESSEE IN HER DEMAT ACCOUNT. THESE SHARES WERE HELD AND POSSESSE D BY HER FOR MORE THAN 12 MONTHS. SALE WAS THROUGH REGI STERED BROKER AND DULY APPROVED BY SEBI AND STOCK EXCHANGE . AGAIN, SALE PRICE WAS RECEIVED THROUGH ACCOUNT PAYE E CHEQUES. SHARES WERE DULY TRANSFERRED FROM HER DEMA T ACCOUNT IN FAVOUR OF THE TRANSFEREE THROUGH REGISTE RED BROKER. THUS THE ENTIRE TRANSACTIONS OF PURCHASE A ND SALES OF SHARES ARE DULY RECORDED AND FOUND SUPPORTED BY BROKERS CONTRACT NOTES, BILLS FOR PURCHASE AND SAL ES OF SHARES ISSUED BY THE APPROVED STOCK BROKERS. IT IS FOUND THAT THE CONTRACT NOTES ISSUED BY M/S PRAKASH NAHAT A & CO. SHOW THAT THE ASSESSEE HAS SHOWN SHARES OF RAM KISHAN FIN CAP ON 19.7.2004, 20.7.2004 AND 16.7.2004 FOR A CONSIDERATION OF RS. 2,86,740/-, 2,88,540/- AND RS. 5,75,400/- RESPECTIVELY. THUS, FROM THE EVIDENCE AV AILABLE ON RECORD, IT IS PROVED THAT THE ASSESSEES TRANSAC TIONS OF PURCHASE AND SALE OF SHARES ARE GENUINE. THE A.O. HAS NOT 11 BROUGHT ANY CONTRARY EVIDENCE TO PROVE OTHERWISE. ALL THE ALLEGATIONS MADE BY THE A.O. ARE SUBSTANTIATED AND ARE BASED ON NO LOGIC. REVELATIONS MADE DURING SEARCH IN THE CASE OF A THIRD PARTY WERE NEVER CONFRONTED WITH TH E ASSESSEE. THEREFORE, THE DEPARTMENT FAILED TO DISPR OVE THE CLAIM OF THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY FALLACY OR INFIRMITY IN THE FINDING OF THE LD. CIT( A). WE UPHOLD THE SAME AND CANNOT ALLOW THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 24 TH OCTOBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH OCTOBER, 2013 VL/- 12 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR