Sh. Hosang R. Debara (Deceased), Agra V. I.T.O.-1(2), Agra

ITA 331/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0534 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 9 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-01-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 18-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: S C AGARWAL
• Keywords: Unexplained expenditure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Corroborative evidences; Accommodation entries
• Section: 271(1)(c); 133(6); 147; 131; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, SMC, AGRA BEFORE SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.331/AGR/2012 ASSESSMENT YEARS: 2000-01 HOSANG R. DEBARA (DECEASED), VS. INCOME TAX OFFIC ER-1(2), THROUGH LEGAL HEIR DOLAT H. DEBARA, AGRA. 38/5, NAGAR KANTI COLONY, IDGAH, AGRA. (PAN: ABLPD 9805 C). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.C. AGARWAL, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R . DATE OF HEARING : 06.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 08.02.2013 ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15.03.2012 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2000-01. 2. THE ASSESSEE HAS RAISED AS MANY AS 9 GROUNDS OF APPEAL INCLUDING GROUND NO.2 PERTAINING TO CHALLENGING NOTICE ISSUED UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). ITA NO.331/AGR/2012 A.YS. 2000-01 2 3. AS REGARDS TO GROUND NO.2 PERTAINING TO PROCEEDI NGS UNDER SECTION 148, THE LD. AUTHORISED REPRESENTATIVE HAS NOT PRESSED THIS GROUND OF APPEAL, THEREFORE, THE SAME IS DISMISSED. HOWEVER, IN RESPECT OF EFFECTIV E GROUNDS OF APPEAL THE LD. AUTHORISED REPRESENTATIVE FURNISHED REVISED GROUND OF APPEAL WHICH IS REPRODUCED AS UNDER :- BECAUSE THE AUTHORITIES BELOW ERRED IN FACTS AS WE LL AS IN LAW IN TREATING RECEIPT RS.1,34,240/- AGAINST LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF SHARES AS INCOME FROM OTHER SOUR CES. ALL RELEVANT DOCUMENTS WERE FILED AND NO IRREGULARITY OR DISCREP ANCY HAS BEEN OBSERVED THEREIN. THE HONBLE COURT HAS ALREADY AC CEPTED SUCH MATTERS. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE DEPARTM ENT WAS IN POSSESSION OF AN INFORMATION THAT THE ASSESSEE HAD TAKEN BOGUS CAPIT AL GAINS ENTRY FROM ONE JRD STOCK BROKER, NEW DELHI. IT WAS SUBMITTED BEFORE T HE A.O. THAT THE ASSESSEE HAS SOLD 1600 SHARES OF M/S. KAUSHAMBHI FIN. & LEAS. LI MITED @ RS.4.50 PER SHARE ON 17.08.1998 THROUGH KUMAR & CO. NEW DELHI. THE SHAR ES WERE SOLD ON 06.09.1999 @ RS.84/- FOR RS.1,34,240/- THROUGH JRD STOCK BROKE R (P) LIMITED, NEW DELHI. THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN OF RS. 1,25,648/-. THE A.O. REJECTED THE ASSESSEES CONTENTION REGARDING REOPEN ING AND ISSUING NOTICE UNDER SECTION 148 OF THE ACT. ON ENQUIRY, IT WAS FOUND B Y THE A.O. THAT JRD STOCK BROKER THROUGH WHOM THE SO CALLED TRANSACTIONS WAS SAID TO BE MADE VIDE LETTER DATED 16.11.2007 HAS STATED THAT WE ARE NOT IN POS SESSION TO OF BOOKS OF ACCOUNT, ITA NO.331/AGR/2012 A.YS. 2000-01 3 HENCE WE REQUEST YOUR HONOUR TO TREAT THIS LETTER A S COMPLIANCE TO YOUR NOTICE IN ABSENCE OF ANY DOCUMENTARY EVIDENCE FURNISHED. TH E A.O. NOTED THAT JRD STOCK BROKER HAS FAILED TO SUPPLY RELEVANT INFORMATION. IT WAS ASCERTAINED THAT NO PARTY- WISE RECORD IS MAINTAINED AND THEY DID NOT BUY SHAR ES ON ACCOUNT OF THE ASSESSEE NOR THEY SELL SHARES ON BEHALF OF THE ASSESSEE. IN FACT, THE REPLY DATED TO THE LETTER DATED 13.11.2007 WAS VERY SKETCHY AND IT DOES NOT E STABLISH THE TRANSACTION OF SALE OF SHARES WITH THE ASSESSEE AND THE SALE BILL DATED 06.09.1999 IS NOTHING BUT A PAPER TRANSACTION WHICH CANNOT BE RELIED UPON IN ABSENCE OF ANY SUPPORTING EVIDENCE OF DOCUMENT WHICH MAY SUGGEST THAT THE ASSESSEE HAD AC TUALLY APPROACHED TO THE SHARE BROKER WITH THE SHARE CERTIFICATES CLAIMED TO HAVE BEEN HELD IN PHYSICAL MANNER, EVEN SUMMON UNDER SECTION 131 DATED 13.11.2 007 ISSUED TO THE BROKER REMAINED UN-COMPLIED WITH TO PRODUCE BOOKS OF ACCOU NT ETC. A LETTER DATED 13.11.2007 WAS ALSO ISSUED BY INVOKING THE PROVISIO NS OF SECTION 133(6) OF THE ACT REQUIRING TO JUSTIFY THE PURCHASE OF SHARES. THE S AID LETTER ADDRESSED TO KUMAR & CO. RECEIVED BACK WITHOUT SERVICE THOUGH IT WAS PRO PERLY ADDRESSED AND STAMPED THROUGH SPEED POST. THE A.O. APPRISED THE ASSESSEE OF THE RETURNING OF LETTER FROM KUMAR & CO, NEW DELHI AND REPLY FROM JRD STOCK BROK ER. THE ASSESSEE WAS ALSO SHOWN THE STATEMENT ON OATH OF SHRI ASHOK KUMAR GUP TA WHO HAS VIDE HIS STATEMENT ON OATH DATED 23.10.2002 HAS ADMITTED OF PROVIDING ENTRIES ONLY AND NO DELIVERY OF SHARE WAS EVER TAKEN OR GIVEN AND THE C ASE WAS FINALLY ADJOURNED TO ITA NO.331/AGR/2012 A.YS. 2000-01 4 28.11.2007. ALSO A COPY OF STATEMENT ON OATH OF SH RI ASHOK KUMAR GUPTA WAS PROVIDED TO THE ASSESSEE AT HIS REQUEST ON 30.11.20 07. ON 30.11.2007 IN WRITTEN REPLY IT WAS SUBMITTED BY THE ASSESSEE THAT THE STA TEMENT WHICH WAS RECORDED ON THE BACK OF THE ASSESSEE WAS NOT RELATED TO THE ASS ESSEE AND IT CAN NOT BE UTILISED AGAINST THE ASSESSEE. THE A.O. DID NOT ACCEPT THE ASSESSEES CONTENTION BECAUSE DESPITE BEST EFFORTS MADE THE BROKER REMAINED FAILE D TO COMPLY THE REQUIREMENT AND EVEN THE REPLY FURNISHED DOES NOT INDICATE THAT ANY SALE TRANSACTION EFFECTED IN THE ASSESSEES CASE THROUGH HIM AND ONCE SHRI ASHOK GUP TA, THE DIRECTOR OF JRD STOCK BROKER HAS ADMITTED THAT THE ONLY ENTRIES WER E PROVIDED ON COMMISSION BASIS AND NO OTHER TRANSACTIONS HAVE BEEN TAKEN PLACE. T HE A.O. CONSIDERED IT NECESSARY TO COUNTER AGAIN AND AGAIN WHEN THERE WAS A COMMITT AL OF WRONG DOING ON THE PART OF SHRI ASHOK KUMAR GUPTA. IN HIS STATEMENT ON OAT H DATED 23.10.2002 BEFORE THE INCOME TAX AUTHORITIES IN A REPLY TO THE QUESTION IT APPEARS AS PER INFORMATION IN OUR POSSESSION THAT YOUR MAIN BUSINESS WAS NOT IN S HARE DEALING BUT PROVIDING ACCOMMODATION ENTRIES OF PROFIT & LOSSES TO PARTIES WHO APPROACHED YOU FOR THIS PURPOSE. IN REPLY TO THAT, SHRI ASHOK GUPTA ALL T OGETHER ADMITTED BY STATING YES, I HAD BEEN PROVIDING ENTRIES TO VARIOUS INDIVIDUALS AND USED TO CHARGE COMMISSION WHICH HAS BEEN ACCOUNTED FOR IN MY BOOKS. I DO NOT REMEMBER AT THE MOMENT, BECAUSE IT VARIES FROM PERSON TO PERSON. THE A.O. NOTICED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS PROVING THE GENUINENES S OF SALES OF SHARES THROUGH ITA NO.331/AGR/2012 A.YS. 2000-01 5 BROKER. THE A.O. MADE THE ADDITION OF RS.1,32,932/ - ON THE GROUND THAT THE ASSESSEE COULD NOT PROVE THE SALE OF SHARES AND GEN UINENESS IN RESPECT OF MONEY FROM SALE OF SHARES. THE A.O. ALSO MADE ADDITION O F RS.1,500/- BEING UNEXPLAINED EXPENDITURE ON ACCOUNT OF PREMIUM MONEY PAID TO THE BROKER AND OTHER PERSONS WHO EXTENDED THE SALE BILL TO THE ASSESSEE. 5. THE CIT(A) HAS CONFIRMED THE ADDITION AS UNDER : - (PAGE NO.8, PARA NO.6.2) 6.2 ON THE BASIS OF THE REPORT OF THE AO SUBMITTED AFTER MAKING ENQUIRY FROM DELHI STOCK EXCHANGE, THOUGH IT HAS BE EN FOUND THAT M/S KAUSHAMBHI FIN. & LEASE LIMITED IS LISTED ON DSE BU T ON THE RELEVANT DATE, NO TRANSACTION IN THESE SHARES WERE REPORTED. THE TRANSACTION CLAIMED BY THE ASSESSEE (APPELLANT) TO HAVE BEEN EN TERED WITH BOTH THE BROKERS M/S JRD STOCK BROKER PVT. LTD. AND M/S KUMA R & CO. WERE NOT REPORTED TO THE STOCK EXCHANGES. EVEN ON THE D ATE OF TRANSACTION, PRICE OF THE SHARES AS CLAIMED IN THE PURCHASE AND SALE BILLS PRODUCED BY THE ASSESSEE (APPELLANT) WAS NOT LISTED IN THE S TOCK EXCHANGE. THE LD. AR HAS ALSO NOT EXPLAINED AS TO FROM WHERE THE PURCHASE AND SALE RATES OF THE SHARES WERE TAKEN. IT IS ALSO A FACT THAT DURING THE COURSE OF INVESTIGATION PROCEEDING OF JRD STOCK BROKERS PV T. LTD., IT ADMITTED OF DOING BUSINESS OF PROVIDING ENTRIES AND NOT DOING ANY GENUINE SHARE BUSINESS. ON THE BASIS OF THE ADMISS ION MADE BY THE BROKER M/S JRD STOCK BROKERS PVT. LTD. AND THE MATE RIALS FOUND DURING THE SEARCH IN ITS PREMISES, ITS ASSESSMENT A LSO HAS BEEN COMPLETED BY THE CENTRAL CIRCLE SECTION OF THE INCO ME TAX DEPARTMENT, DELHI AND PENALTY U/S 271(1)(C) HAS ALS O BEEN LEVIED WHICH ARE CONFIRMED TILL THE LEVEL OF HONBLE ITAT DELHI IN WHICH, IT HAS BEEN HELD THAT THIS BROKER WAS IN THE BUSINESS OF PROVIDING ENTRIES OF BOGUS CAPITAL GAIN. THESE ARE THE FACTS WHICH A RE AVAILABLE IN THE RECORD OF THE DEPARTMENT AND THESE FACTS CANNOT BE DENIED AND HENCE, EVEN IF NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE (A PPELLANT) TO CROSS EXAMINATION M/S JRD STOCK BROKERS PVT. LTD., THE FA CT THAT THE ITA NO.331/AGR/2012 A.YS. 2000-01 6 ASSESSEE (APPELLANT) RECEIVED ENTRY OF BOGUS CAPITA L GAIN FROM M/S JRD STOCK BROKERS PVT. LTD. CANNOT BE DENIED AND TH EREFORE, I AGREE WITH THE FINDINGS OF THE AO THAT THE AMOUNT OF RS.1 ,32,932/- RECEIVED FROM M/S JRD STOCK BROKERS PVT. LTD. SHOWING SALE O F SHARES OF KAUSHAMBHI FIN & LEASING LIMITED IS ENTRY IN FORM O F BOGUS CAPITAL GAIN AND LIABLE TO BE ADDED AS UNDISCLOSED/UNEXPLAI NED INCOME OF THE ASSESSEE (APPELLANT). THE AO IS ALSO JUSTIFIED IN MAKING ADDITION OF RS.1,500/- AS COMMISSION BEING PAID FOR OBTAINING T HE ENTRY OF RS.1,32,932/- BECAUSE IN THE MARKET, SUCH ENTRIES A RE BEING PROVIDED PAYING CERTAIN AMOUNT OF COMMISSION. IN VIEW OF MY ABOVE FINDINGS, BOTH THE ADDITIONS OF RS.1,32,932/- & RS.1,500/- AR E HEREBY CONFIRMED AND THEREFORE, ALL THE GROUNDS TAKEN BY THE APPELLA NT FROM GROUND NO.2 TO 11 ARE DISMISSED. 6. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. FOR REOPENING THE ASSESSMENT INVOKING SECTION 147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148. BEFORE DELETI NG THE ADDITION, THE CIT(A) CALLED FOR THE REMAND REPORT FROM THE A.O. THE A.O . MADE ENQUIRY FROM DELHI STOCK EXCHANGE ASSOCIATION LIMITED. DELHI STOCK EX CHANGE ASSOCIATION LIMITED VIDE LETTER DATED 28.02.2011 FURNISHED THE DETAILS OF SHARES OF KAUSHAMBHI FIN & LEASE LIMITED THAT THESE SHARES ARE LISTED WITH THE M I.E. DELHI STOCK EXCHANGE ASSOCIATION LIMITED. A STATEMENT SHOWING THE DETAI LS OF THE SAID SHARES DATED 06.09.1999, 05.09.1999, 07.09.1999 AND 11.08.1998 W AS ALSO SUBMITTED. ON PERUSAL OF DETAILS, IT WAS FOUND THAT ON THE DATE O F SALE OF SHARES I.E. ON 06.09.1999 NO TRADE WAS REPORTED IN THESE SHARES THROUGH DMAT OR SPOT TRADE. HE FURTHER SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY VARIOUS ORDERS OF ITA NO.331/AGR/2012 A.YS. 2000-01 7 I.T.A.T., AGRA BENCH AND OTHERS. A COMPILATION OF CITATION HAS BEEN FILED WHICH IS AS UNDER :- I) ORDER OF ITAT, AGRA BENCH IN ITA NO.237/AGRA/201 1 IN THE CASE OF ACIT VS. RAM PRAKASH GARG. II) ORDER OF ITAT, AGRA BENCH IN ITA NO.266/AGRA/20 10 IN THE CASE OF ITO VS. RAKESH KHATRAPAL. III) ORDER OF ITAT, AGRA BENCH IN ITA NO.233/AGRA/2 010 IN THE CASE OF ACIT VS. RAM CHAND KESHAV DEV HUF. IV) ORDER OF ITAT, AGRA BENCH IN ITA NO.255/AGRA/20 04 IN THE CASE OF VINEET KHERA VS. ITO. V) ORDER OF ITAT, AGRA BENCH IN ITA NO.129/AGR/2004 IN THE CASE OF ASHOK KUMR AGARWAL VS. ACIT. VI) ITO VS. RAJIV AGARWAL, 139 TAXMAN 170 (ITAT) VII) KISHIN CHAND CHELLA RAM VS. CIT, 125 ITR 713 ( SC) VIII) TULSE DASS BABULAL VS. CST (1999) UPTC 1273 ( ALL.) IX) PRAKASH CHAND MEHTA VS. CIT, 301 ITR 134 (MP) X) CST VS. MOTI OIL MILLS (1980) UPTC 557 (ALL) XI) CIT VS. DAULAT RAM RAWATMULL, 87 ITR 349 (SC) 7. LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HA ND, RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE DELHI STOCK EXCHANGE LIMITED VIDE LETTER DATED 28.02.2011 FURNISHED INFORMATION CALLED BY THE A.O. UNDER SECTION 133(6) OF THE ACT. COPY OF THE SAID LETTER HAS BEEN PLACED AT PA GE NOS.31 & 32 OF THE ASSESSEES PAPER BOOK. RELEVANT PARA NO.4 OF THE SAID LETTER READS AS UNDER. 4. AS PER SEBI GUIDELINES, THE MEMBERS ARE REQUIRE D TO REPORT ON THE SAME DAY ALL TRANSACTIONS ADJUSTED IN THEIR BOOKS W HETHER BETWEEN TWO CLIENTS OR WHETHER BETWEEN A CLIENT AND THE BROKER AS A PRINCIPAL. A COPY OF THE SEBI CIRCULAR BEARING REFERENCE NO.SMD/RCG/CIR (BKG) 293/95 DT. 14 TH MARCH 1995 IS ENCLOSED AS ANNEXURE-B ITA NO.331/AGR/2012 A.YS. 2000-01 8 8. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED WITH R EFERENCE TO AOS ORDER THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENE SS OF THE SHARES. 9. I HAVE HEARD THE LD. REPRESENTATIVES OF THE PART IES AND RECORDS PERUSED. THE CIT(A) HAS DISMISSED THE ASSESSEES APPEAL ON TWO G ROUNDS THAT THE SHARE TRANSACTIONS CLAIMED BY THE ASSESSEE TO HAVE BEEN E NTERED WITH THE BROKER M/S. JRD STOCK BROKER PVT. LTD. AND M/S. KUMAR & CO. WHE RE NOT REPORTED TO THE STOCK EXCHANGES. EVEN ON THE DATE OF TRANSACTION, PRICE OF THE SHARES AS CLAIMED IN THE PURCHASE AND SALE BILLS PRODUCED BY THE ASSESSEE WA S NOT LISTED IN THE SOCK EXCHANGE. SECONDLY, THE BROKER M/S. JRD STOCK BROK ERS PVT. LTD. ADMITTED THAT THEY ARE DOING BUSINESS OF PROVIDING ENTRIES AND NO T DOING ANY GENUINE SHARE BUSINESS. THIS FACT WAS SUPPORTED BY THE MATERIAL FOUND DURING THE COURSE OF SEARCH IN CASE OF M/S. JRD STOCK BROKERS PVT. LTD. HOWEVER, THE CIT(A) DENIED THE OPPORTUNITY OF CROSS EXAMINATION OF M/S. JRD ST OCK BROKERS PVT. LTD. INSPITE OF SPECIFIC REQUEST MADE BY THE ASSESSEE VIDE HIS L ETTER DATED 30 TH NOVEMBER 2007. NON-PROVIDING OPPORTUNITY OF CROSS EXAMINATION AMOU NTS TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. IN THE LIGHT OF THE FACT, I SE T ASIDE THE ORDER OF CIT(A) AND THINK IT PROPER TO SEND BACK THIS MATTER TO THE FILE OF C IT(A) WITH THE DIRECTION TO PROVIDE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINATION OF M/S. JRD STOCK BROKERS PVT. LTD. AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, CONSIDERING THE VARIOUS ITA NO.331/AGR/2012 A.YS. 2000-01 9 DECISIONS CITED BY THE LD. AUTHORISED REPRESENTATIV E. THE CIT(A) WILL DECIDE THE ISSUE AFTER PROVIDING REASONABLE OPPORTUNITY OF HEA RING TO BOTH THE SIDES. THE ASSESSEE IS AT LIBERTY TO FILE NECESSARY EVIDENCE I N SUPPORT OF ITS CLAIM AND THE SAME SHALL BE CONSIDERED BY THE CIT(A) AFRESH. 10 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY