Shri Upendra Trikamlal Shah, Ahmedabad V. The Income tax Officer,Ward-2(3), Ahmedabad

ITA 3251/AHD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0444 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: T H VASA
• Keywords: Speculation loss

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.3251/AHD/2011 ( % & '& / ASSESSMENT YEAR : 1997-98) UPENDRA TRIKAMLAL SHAH 1459, NEW MADHUPURA AHMEDABAD-38 002 % / VS. THE INCOME TAX OFFICER WARD-2(3) AHMEDABAD ./ ./ PAN/GIR NO. : ACIPS 6606 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI T.H. VASA, A.R. / RESPONDENT BY : SHRI Y.P.VERMA, SR.D.R. / DATE OF HEARING : 24/01/2013 !'# / DATE OF PRONOUNCEMENT : 22/03/2013 $% / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING F ROM THE ORDER OF LD.CIT(A)-6, AHMEDABAD DATED 20/10/2011 PASSED FOR A.Y.1997-98 AND THE GROUNDS ARGUED BEFORE US IS GROUND NOS.2 & 3 GROUNDS, AS PER CONCISED GROUNDS REPRODUCED BELOW:- [2] THAT THE LD. COMMISSIONER OF INCOME-TAX (APPE ALS)-6, AHMEDABAD HAS ERRED IN CONFIRMING ADDITION AS INCOM E U/S.68 OF THE I T ACT, 1961 TAKING PEAK OF RS.1,90,805/- FOR THE ASST.YEAR 1997-98 WORKED OUT AS UNDER:- ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 2 - PROFIT IN THE ACCOUNT OF PURIBEN CHAUDHARI (A.Y. 97 -98) RS. 93,375/- ADD : CANCELLED CHEQUE FOR THE APPELLANT OF S K NAIR (A.Y. 96-97) RS. 70,950 /- AND SALE OF 100 SHARES OF TISCO BY SK NAIR (A.Y. 97-98) RS. 30,400/- ---------------- RS.1,94,725/- LESS :BROKERAGE IN THE BILLS OF SK NAIR RS. 3,920/- ---------------- NET BALANCE :: RS.1,90,805/- ---------------- [3] THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS)-6, AHMEDABAD DID NOT CONSIDER THAT SMT.PURIBEN CHAUDHARI AND SHR I S K NAIR WERE CUSTOMERS AND NO ADDITION U/S.68 OF THE I T ACT IS MAINTAINABLE. 2. THIS IS THE SECOND GROUND OF PROCEEDINGS. EARLI ER, THE ITAT D BENCH VIDE ITS ORDER DATED 28/04/2006 (ITA NO.1228/AHD/2001) HAD RESTORED THE MATTER BACK TO T HE FILE OF AO FOR AFRESH ADJUDICATION. IN THIS SECOND ROUND OF ASSESSMENT, THE ONLY OBSERVATION OF THE AO WAS THAT THE CUSTOMERS, NAMELY SMT.PURIBEN CHAUDHARY AND SHRI S.K.NAIR HAVE NOT BE EN PRODUCED FOR VERIFICATION, HENCE THE DIRECTIONS WERE NOT COM PLIED, THEREFORE THE ADDITION AS IT WAS MADE IN THE ORIGINAL ASSESSM ENT WAS REPEATED. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. IN RESPECT OF THE ADDITION MADE IN THE NAME OF MR.NAIR THE ASSESSEE HAS SUBMITTED AS FOLLOWS:- SHRI S.K. NAIR WAS A CUSTOMER WHO WAS BEING ATTEND ED TO BY SHRI GIRISH SHAH. SHRI GIRISH SHAH WAS AN EMPLOYEE OF THE APPELLANT WHO USED TO LOOK AFTER VARIOUS ADMINISTRA TION AND ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 3 - STOCK EXCHANGE WORK. SHRI S K NAIR WAS ISSUED A CH EQUE IN THE PREVIOUS YEAR FOR PAYMENT MADE TO HIM OF RS.70, 950/-. THIS CHEQUE WAS RETURNED BY SHRI GIRISH SHAH AND WA S CANCELLED. ON CANCELLATION OF CHEQUE, DUE CREDIT W AS GIVEN TO S K NAIR. THEREAFTER, CERTAIN TRANSACTIONS WERE MA DE IN HIS ACCOUNT AND FINALLY AN AMOUNT OF RS.25,376.50 REMAI NED TO BE PAID TO HIM. THIS AMOUNT WAS PAID BY UPENDRA T.SHA H AT THE END OF THE YEAR AND WAS DEBITED IN BHAGYODAYA CO-OP ERATIVE BANK LTD. ON 12-5-97. WITH A VIEW TO FIND OUT ADDRESS OF SHRI S.K.NAIR, W E APPROACHED OUR BANKERS TO GIVE US INFORMATION ON SH RI S K NAIRS BANKERS. ON INQUIRY WITH OUR BANK, IT IS LE ARNT THAT HE CHEQUE WAS TRANSFERRED IN THE NAME OF TRUPTI G.SHAH (WIFE OF SHRI GIRISH SHAH) AND WAS DEPOSITED IN HER BANK ACC OUNT WITH BHAGYODAYA BANK LTD. CURRENT ACCOUNT NO.15224. A ZEROX COPY OF HER BANK STATEMENT AND COPY OF CERTIFICATE ISSUED BY BANK ARE ENCLOSED. 2.1. HOWEVER, IN RESPECT OF THE ADDITION IN THE NAM E OF SMT.PURIBEN CHAUDHARY, LD.CIT(A) HAS REPRODUCED THE OBSERVATION OF THE AO AS UNDER:- PURIBEN CHAUDHARI IN THIS ACCOUNT, SPECULATION PROFIT OF RS.93,375/- WAS CREDITED IN SETTLEMENT NO.18 AND VIDE BILL NO.17, DATED 5.8. 96. ON ACCOUNT OF SPECULATION IN THE SHARES OF TISCO, NET SPECULATIVE PROFIT OF RS.93,375/- WAS CREDITED IN THIS PARTICUL AR ACCOUNT AND IT WAS CLAIMED THAT PAYMENT WAS MADE ON 29.3.97 TO ABOVE CLIENT. HOWEVER, WHEN APPELLANT WAS SPECIFIC ALLY ASKED TO FURNISH ADDRESS AND CONFIRMATION FROM PURIBEN CH AUDHARI, IT WAS SUBMITTED VIDE LETTER DATED 8.2.2000 THAT TR ANSACTIONS WERE DONE THROUGH ONE OF HIS EMPLOYEE GIRISH SHAH A ND HE IS NOT HAVING THE ADDRESS OF CLIENT IN HIS RECORDS. N O ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 4 - CONFIRMATION WAS OBTAINED EITHER FROM SO CALLED CLI ENT AND NO EVIDENCE REGARDING THE PAYMENT MADE TO SUCH EXISTIN G PERSON NAMELY PURVIBEN CHAUDHARI WAS FURNISHED. THEREFORE , IT IS SPECULATIVE PROFIT EARNED BY THE APPELLANT WHICH HA S BEEN BOOKED IN DUMMY NAME OF PURIBEN CHAUDHARI. THEREFO RE, SAME IS TO BE ADDED IN HANDS OF APPELLANT. 2.2. THE LD.CIT(A) WAS NOT CONVINCED AND HELD THAT THE APPELLANT WAS REQUIRED TO SUBMIT THE EVIDENCE TO PROVE THE GE NUINENESS OF THE TRANSACTION BUT THAT ONUS WAS NOT DISCHARGED. ACC ORDING TO HIM, THE ASSESSEE HAD FAILED TO PROVIDE THE ADDRESSES OF THO SE PARTIES. IN THE RESULT, THE ACTION OF THE AO WAS CONFIRMED. 3. WITH THIS BRIEF BACKGROUND, WE HAVE HEARD BOTH T HE SIDES. LD.AR HAS PLACED RELIANCE ON THE EVIDENCES, NAMELY COPY OF ACCOUNT OF SMT.PURIBEN CHAUDHARY, COPY OF BILLS IN HER NAME AND BANK STATEMENT MENTIONING THE TRANSACTION. HE HAS PLACED RELIANCE ON COPY OF ACCOUNT OF MR.S.K.NAIR, XEROX COPY OF TH E BILL AND BANK STATEMENT. LD.AR HAS ALSO STATED THAT AS FAR AS TH E ASSESSEE IS CONCERNED, THE TRANSACTIONS WERE DULY MADE AND IN S UPPORT PLACED ON RECORD BANK STATEMENT OF U.T.SHAH AND TRUPTI G.S HAH. FROM THE SIDE OF THE REVENUE, LD.DR HAS SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 4. IN THE LIGHT OF THE ABOVE BRIEF FACTUAL BACKGR OUND, WE HAVE HEARD BOTH THE SIDES. AN ANOTHER FACT HAS ALSO BEEN VEHE MENTLY PLEADED ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 5 - THAT THE ENTIRE CONFUSION HAS HAPPENED BECAUSE ONE OF THE EMPLOYEE, NAMELY SHRI GIRISH SHAH HAS MISAPPROPRIATED THE FUN DS OF THE ASSESSEE AND THEREFORE, THE ASSESSEE HAD FILED A CR IMINAL COMPLAINT AGAINST HIM. IN THIS REGARD, THE FACTS STATED BEFO RE THE REVENUE AUTHORITIES WERE AS FOLLOWS:- THE APPELLANT IS A BROKER RECOGNIZED ON AHMEDABAD STOCK EXCHANGE, NATIONAL STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE. THE LD. A.O., DURING COURSE OF ASST. PRO CEEDINGS, HAD CALLED FOR BOOKS OF ACCOUNTS AND ALSO SEVERAL D ETAILS WHICH WERE FURNISHED DURING THE COURSE OF ASST.PROC EEDINGS. OUT OF VARIOUS ACCOUNTS OF THE CUSTOMERS, WHOSE CONFIRMATIONS WERE GIVEN TO THE LD.A.O., TWO ACCOUN TS ONE OF PURIBEN CHAUDHARY AND ANOTHER OF S.K. NAIR, THE CONFIRMATIONS OF THE PARTIES COULD NOT BE PRODUCED BECAUSE THESE TWO ACCOUNTS WERE THROUGH ONE OF THE EMPLOYEE S OF THE APPELLANT SHRI GIRISH SHAH, WHO HAD EMBEZZLED THE A MOUNTS AND THE APPELLANT HAD FILED CRIMINAL COMPLAINT AGAI NST THE SAID EMPLOYEE. 5. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WHEN BOTH THE PARTIES WERE FOUND TO BE THE CUSTOMER OF THE ASSESSEE AND THE ASSESSEE HAD TRANSACTED THE IMPUGNED AMOUNT THROUGH BANKING CHANNEL FOR THOSE CUSTOMERS AS DULY SUPPORT ED BY BILLS AND BANK STATEMENT, THEN IT IS NOT JUSTIFIABLE TO DISRE GARD THOSE EVIDENCES. SINCE INCEPTION THE ASSESSEE WAS INFORMING THE AO T HAT THE ENTIRE PROBLEM WAS CREATED BY ONE OF THE EMPLOYEE, NAMELY SHRI GIRISH SHAH WHO HAD EMBEZZLED THE AMOUNT OF THE ASSESSEE AND BECAUSE OF THE SAID EMBEZZLEMENT A CRIMINAL COMPLAINT HAD B EEN LODGED ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 6 - AGAINST HIM. EVEN THE TRIBUNAL HAS ACKNOWLEDGED THIS FACT WHILE DECIDING THE APPEAL BUT WANTED THE ASSESSEE TO GRAN T AN OPPORTUNITY TO STATE THE FACTS TO THE AO ALONG WITH THE MATERIA L AVAILABLE IN SUPPORT OF THE CLAIM. THE TRIBUNAL WAS ALSO AWAR E THAT THE CONFIRMATIONS FROM THOSE PARTIES WERE VERY MUCH ON RECORD. RATHER, IN THE FIRST ROUND OF APPELLATE PROCEEDINGS, LD.CIT (A) AHMEDABAD IN APPEAL NO.CIT(A)II/CIR.2(5)/25/2000-01 ORDER DATED 28.8.2001 HAS DECIDED THE ISSUE IN ASSESSEES FAVOUR IN RESPE CT OF BOTH THE PARTIES AS FOLLOWS:- AS REGARDS PURBIBEN CHAUDHARI, SHE HAD IN THE PAST ALSO, PARTICULARLY IN F.Y. 1992-93 FOR WHICH THERE ARE CO NTRACT NOTES SHOWING SALE OF SHARES BY HER OF INDIAN TONNE THE PAYMENT OF THE SAME HAS BEEN SHOWN AT RS.7500/-. I T IS EVIDENCED BY THE BANK STATEMENT ALSO AND SIMILARLY IN SALE OF SHARES OF INSILCO, KUKU MOTORS AND PENTOKEY ORG. THE PAYMENT OF RS.15,300/- WAS MADE ON 15.9.9 2 BY CHEQUE WHICH IS ALSO APPEARING IN THE BANK STATEMEN T OF THE APPELLANT IN THE BHAGYODAYA CO.OPERATIVE BANK LIMIT ED (ACCOUNT NO.144). I AM THEREFORE OF THE OPINION TH AT PURBIBEN CHAUDHARI IS A GENUINE CUSTOMER AND THEREFORE, THE ADDITION OF RS.93,375/- IN HER ACCOUNT CANNOT BE TAKEN AS IN COME OF THE ASSESSEE. COMING TO S.K.NAIR, THE AMOUNT OF RS.70,950/- IS A CREDIT BALANCE IN HIS ACCOUNT AS APPEARING ON 18-1-1995. APPELLANT HAD WRITTEN A CHEQUE FOR THIS AMOUNT AT T HE END OF THE F.Y. I.E. 30-3-95 BUT THE SAME WAS CANCELLED AN D THEREFORE THIS AMOUNT APPEARED BY WAY OF CREDIT IN HIS ACCOUN T ONCE AGAIN BECAUSE THE CHEQUE WAS NEVER GIVEN TO HIM. T HEREFORE, IT CANNOT BE TREATED AS CASH CREDIT. FURTHER CREDI T OF ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 7 - RS.30,400/- IS ON ACCOUNT OF HAD DELIVERY AND AFTER SETTING OF THE SPECULATION LOSS IN HIS ACCOUNT, FINAL PAYMENT OF RS.25,376/- WAS PAID THROUGH SHRI GIRISH SHAH WHO H AD MIS APPROPRIATED THIS AMOUNT TO THE ACCOUNT OF HIS WIFE AND THE PAYMENT MADE BY THE ASSESSEE WAS CLEARED IN APPELLA NTS BANK ACCOUNT IN CENTRAL BANK OF INDIA ON 12-5-97 BY CHEQ UE NO.406813. COPY OF THE BANK ACCOUNT OF SMT.TRUPTI GIRISH SHAH HAS BEEN FILED TO SHOW THAT THE SAME WAS DEPOS ITED IN HER ACCOUNT AND THEREFORE, THE ACCOUNT OF SHRI S.K. NAIR IN NO CASE CAN BE HELD TO BE THAT BELONGING TO THE APPELL ANT. IN THIS VIEW OF THE MATTER, THE ENTIRE ADDITION MADE BY THE AO IN THESE TWO ACCOUNTS RS.1,90,805/- STANDS DELETED. 5.1. THUS, UNDER THE TOTALITY OF THE FACTS AND CIRC UMSTANCES OF THE CASE, WE ARE OF THE CONSCIENTIOUS VIEW THAT THE ASS ESSEE HAS SUCCESSFULLY ESTABLISHED THE IDENTITY OF THOSE PERS ONS AS WELL AS ESTABLISHED THE GENUINENESS OF THE TRANSACTION DULY SUPPORTED BY COGENT EVIDENCES, HENCE THERE WAS NO OCCASION ON TH E PART OF THE REVENUE AUTHORITIES TO DISCARD THOSE EVIDENCES SPEC IALLY IN THE ABSENCE OF ANY CONTRADICTORY MATERIAL EVIDENCE. THE ADDITION IS HEREBY DELETED AND GROUND IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. SD/- SD/- ( &..'# ) ( ' ' ( ) $ )* $ ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22 / 3 /2013 &.., .*../ T.C. NAIR, SR. PS ITA NO.3251/AHD /2011 UPENDRA TRIKAMLAL SHAH VS. ITO ASST.YEAR - 1997-98 - 8 - ') * +,- .'-' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-6, AHMEDABAD 5. 234 **-., -.#, 5'$,$ / DR, ITAT, AHMEDABAD 6. 467 8 / GUARD FILE. ')% / BY ORDER, 2 * //TRUE COPY// // 0 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER DATED 16.3. 13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.3.13 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S22.3.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.3.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER