DIMPLE ASHISH RUIA, MUMBAI V. ACIT 14(3), MUMBAI

ITA 3342/MUM/2012

• Counselvise Citation: 334219914 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 17-09-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 14-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Assessee Lawyers: HIRO RAI
• Keywords: Principle of natural justice

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. . .. . . .. . , ,, , !'# !'# !'# !'# , ' ' ' ' BEFORE S/SH. I.P. BANSAL,JUDICIAL MEMBER & RAJENDRA ,ACCOUNTANT MEMBER /. ITA NO.3342/MUM/2012 , $ $$ $ % % % % / ASSESSMENT YEAR-2006-07 DIMPLE ASHISH RUIA 74 GYAN BUILDING, 25 RAMWADI, KALBADEVI ROAD, MUMBAI- 400002 VS. ACIT 14(3) 6 TH FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021 PAN:ACZPR3950K ( &' / APPELLANT) ( ()&' / RESPONDENT) &' &' &' &' * * * * ' '' ' / APPELLANT BY : SHRI HIRO RAI ()&' + * ' / RESPONDENT BY : SHRI SALMAN KHAN $ $ $ $ + ++ + , , , , / DATE OF HEARING : 17-09-2013 -.% + , / DATE OF PRONOUNCEMENT : 20-09-2013 '/ / O R D E R PER RAJENDRA, AM FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY THE AP PELLANT AGAINST THE ORDER DATED 03-05-2012 OF THE CIT(A)-25, MUMBAI FOR THE AY 2006-07: 1.00.UNDER THE FACTS AND IN LAW, THE LEARNED CIT (A ), ERRED IN CONFIRMING THE LEVY OF CONCEALMENT PENA LTY OF RS.36,92,286/- ON ACCOUNT OF AN ASSESSING SHORT TER M CAPITAL GAIN AS INCOME FROM OTHER SOURCES. 1.02.THE LEARNED CIT (A) FAILED TO APPRECIATE THE F ACT THAT THE EXPLANATION OFFERED WAS NOT FOUND FALS E BY THE ASSESSING OFFICER. 1.03.THE LEARNED CIT (A) FAILED TO APPRECIATE THE F ACT THAT THE EXPLANATIONS AND SUPPORTING GIVEN IN R ESPECT TO SHARE TRANSACTIONS ARE BONAFIDE AND APPELLANT STILL BELIEVE THAT THE SAME IS BONAFIDE TRANSACTIONS. 1.04..THE LEANED CIT (A) FAILED TO CONSIDER THE WRI TTEN SUBMISSION MADE BEFORE HIM. 2.00.THE LEARNED CIT (A) IS IN ERROR IN CONFIRMING PENALTY BY STATING APPELLANT HAS FAILED TO ESTABLI SH THAT TRANSACTION WAS GENUINE AND BONAFIDE. AND ASSESSE E WAS EXFACIE WRONG AND WAS SOLELY AIMED TO EVADE T AX LIABILITY. 2.01.THE LEARNED CIT (A) IS IN ERROR WHILE STATING THAT UNLESS AND UNTIL THERE IS COLLUSION BETWEEN T HE ASSESSEE AND THE BROKER 3.00.UNDER THE FACTS AND IN THE LAW, THERE IS NEITH ER CONCEALMENT OF INCOME NOR FURNISHING INACCURATE PARTICULARS AS CONTEMPLATED U/S 271(1 )(C) OF THE INCOME TAX AC T, 1961 4.00.THE LEARNED CIT (A) HAS VIOLATED PRINCIPLES OF NATURAL JUSTICE BY NOT OFFERING THE REASONABLE OPP ORTUNITY, AS REQUESTED BY THE AUTHORIZED REPRESENTATIVE OF AN AP PELLANT. 4.02.THE CIT (A) HAS PASSED THE APPEAL ORDER IN HAS TE WHICH IS EVIDENCED BY THE FACT THAT A HE PASSED THE ORDER ON THE DATE OF HEARING ITSELF. 5.00.THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DE LETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2 ITA NO.3342/MUM/2012 DIMPLE ASHISH RUIA . 2. ASSESSEE, AN INDIVIDUAL,FILED HER RETURN OF INCOME ON 27.07.2006 DECLARING TOTAL INCOME OF RS. 58.59 LACS.ASSESSMENT WAS FINALISED BY THE ASSESSING OFFI CER (AO) ON 30.12.2008 DETERMINING THE TOTAL INCO -ME OF THE ASSESSEE AT RS. 1.82 CRORES, U/S.143(3) OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT ASSESSEE HAD SHOWN SHORT TERM CAPITAL GA IN (STCG) OF RS. 59.35 LACS WHICH WAS TO BE TAXED @ 10%. AO ASKED THE ASSESSEE TO FURNISH CERTA IN DETAILS ABOUT THE SAID TRANSACTION.AFTER CONSIDE R -ING THE FACTS OF THE CASE, AO HELD THAT STCG CLAIM ED BY THE ASSESSEE WAS NOTHING BUT A FAKE ENTRY TAKEN UNDER THE GRAB OF STCG, THAT THE TRANSACTIONS WERE NOT ROUTED THROUGH THE STOCK EXCHANGE, THAT STT PAYMENT SHOWN IN THE BROKERS BILL WAS ALSO A B OGUS ENTRY THAT THE ASSESSEE HAD NEITHER MADE ANY PAYMENT FOR THE PURCHASE OF SHARES NOR HAD SHE GIVE N ANY ADVANCE DEPOSIT TO THE BROKER,THAT THE ENTIRE STCG WAS IMMEDIATELY TRANSFERRED FROM HER ACCOUNT T O THE BANK ACCOUNTS OF THE FAMILY-CONCERNS. FINALLY,AO HELD THAT ENTIRE SALE CONSIDERATION OF R S. 1.67 CRORES WAS TO BE TREATED AS INCOME FROM OTHER SOURCES. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA),WHO CONFIRM THE ORDER OF THE AO. IN THE APPELLATE PROCEEDINGS BEFORE THE ITA T IT WAS ARGUED THAT ASSESSEE HAD RECEIVED PROFIT AMOUNTING TO RS.59.35 LACS ONLY,THAT ADDITION OF EN TIRE SALE PROCEEDS AMOUNTING TO RS. 1.67 CRORES WAS NOT PROPER. DECIDING THE APPEAL (ITA NO. 2270/MUM/2 010- AY 2006-07,DATED 30.11.11)TRIBUNAL HELD AS UNDER:- 6.WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN THE INSTANT CASE FAILED TO PRO VE WITH EVIDENCE TO THE SATISFACTION OF THE A,O. REGARDING THE GENUINENESS OF THE SALE AND PURCHASE OF SHARES MADE THROUGH M/S SUNCHAN SECURITIES LTD IT IS ALSO OBSERVED FROM THE ORDER OF THE AO AS WEL L AS LD. CIT(A) THAT THE ASSESSEE HAS NEITHER PAID ANY AMOUNT FOR THE PURCHASE OF THE SHARES NOR RECEIVED THE ENTIRE SALE PROCEEDS IT HAS ONLY RECEIVED THE PROFIT ELEMENT OF RS 59,35,777/- WHICH IS ALSO AS P ER THE FINDING GIVEN BY THE AO.UNDER THESE CIRCUMSTANCES WHILE THE REVENUE AUTHORITIES WERE JU STIFIED IN TREATING THE INCOME AS INCOME FROM OTHER SOURCES, AS AGAINST SHORT TERM CAPITAL GAIN DECLARED BY THE ASSESSEE, HOWEVER, THE ENTIRE SALE PROCEEDS, IN OUR OPINION, CANNOT BE TREATED AS INCO ME OF THE ASSESSEE.IF THE SALES WERE BOGUS THEN THE PURCHASES WERE ALSO BOGUS.THEREFORE, ONLY THE DIFFE RENCE BETWEEN THE SALE AND PURCHASE IE. RS. 59,35, 777/- COULD HAVE BEEN ADDED. WE,THEREFORE, SET ASID E THE ORDER OF THE ID. CIT(A) AND DIRECT THE A.O. T O TREAT ONLY THE AMOUNT OF RS.59,35,777/- AS INCOME FROM OTHER SOURCES AS AGAINST THE ENTIRE SALE PROCEEDS OF RS. 1,67, 83,121/-TAKEN BY HIM. THE GRO UNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. MEANWHILE AO ISSUED A NOTICE U/S. 274 R.W.S. 271(1) (C) OF THE ACT ON 30.12.2008. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, AO HELD THAT TRANSA CTION IN QUESTION WAS NOT REAL.FINALLY, HE IMPOSED PENALTY OF RS. 36,92,286/- U/S. 271(1)(C) OF THE AC T, BEING 100% OF THE TAX SOUGHT TO BE EVADED. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, PENALTY ORDER AND THE ORDER OF THE TRIBUNAL (SUPRA) ,HE HELD THAT ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE PURCHASE,THAT EVIDENCE OF PAYMEN T OF PURCHASING SHARES WAS NOT PRODUCED DURING THE ASSESSMENT PROCEEDINGS,THAT THE SAME FACTS REMA INED UNCONTROVERTED BEFORE THE FIRST AND THE SECOND APPELLATE AUTHORITIES IN QUANTUM APPEAL,THAT THE BI LLS PROCURED FROM THE BROKER WERE DESIGNED IN A MANNER TO GIVEN THE COLOUR OF GENUINENESS TO THE TR ANSACTION,THAT STCG CLAIMED TO HAVE BEEN EARNED BY HER WAS A DUBIOUS DEVICE TO CONVERT UNDISCLOSED INCOME AS ACCOUNTED INCOME PAYING 10% OF TAX, THAT ASSESSEE TRIED TO MANAGE EVASION OF TAX LIABIL ITY BY SUPPRESSING A REAL INCOME, THAT BECAUSE OF T HE SELECTION OF THE CASE FOR SCRUTINY APPARENTLY UNTE NABLE CLAIM WAS UNEARTHED, THAT AO WAS LIBERAL TO LEVY PENALTY @ 100%. REFERRING TO THE ORDERS OF THE HONBLE SUPREME COURT DELIVERED IN THE CASES OF 3 ITA NO.3342/MUM/2012 DIMPLE ASHISH RUIA . K.P.MADHUSUDHANAN (251 ITR99),DHARMENDRA TEXTILE PR OCESSORS(295 ITR 244) AND ORDER OF THE HON BLE HIGH COURT OF DELHI DELIVERED IN THE CASE OF ZO OM COMMUNICATION(233CTR465),HE DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT PENALTY SHOULD HAVE BEEN LEVIED ONLY FOR RS. 59.35 LACS NOT FOR THE ENTIRE AMOUNT OF 1.67 CR ORES, THAT THE ASSESSEE HAD NOT PREFERRED APPEAL AGAINST THE ORDER OF THE ITAT BEFORE THE HONBLE HI GH COURT OF BOMBAY. DR SUBMITTED THAT IN LIGHT OF THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL (SUPRA) MATTER MIGHT BE DECIDED ON MERITS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IN THIS CASE ASSESSEE HAD SHOWN STCG OF RS.59.35 LACS AND IN QUANTUM APPEAL I T WAS FOUND THAT SAID TRANSACTION WAS NOT GENUINE.AFTER CONSIDERING THE ORDER OF THE TRIBUNAL (SUPRA),WE HAVE NO HESITATION TO UPHOLD THE ORDER OF THE FAA FOR CONFIRMING THE PENALTY LEVIED BY THE AO.THE ONLY DISPUTE IS ABOUT AMOUNT ON WHICH PENALTY SHOULD BE LEVIED.WE FIND THAT TRIBUNAL HAS UPHELD THE ADDITION OF RS. 59.35 LACS. THEREFORE, PENALTY U/S.271(1)(C) OF THE ACT SHOULD BE LEVIED O NLY OF RS. 59.35 LACS AND NOT ON RS. 1.67 CRORES. A O DIRECTED TO RE-CALCULATE THE AMOUNT OF PENALTY ACCO RDINGLY.I.E.@100%. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. 1 2 $1, 3 4 / 5, + !, 67. ORDER PRONOUNCED IN THE OP EN COURT ON 20 TH SEPTEMBER, 2013. '/ + -.% ' 8 , , , , 20.2013 . + 9. SD/- SD/- ( . .. . . .. . , ,, , / I.P.BANSAL ) ( !'# !'# !'# !'# / RAJENDRA) / JUDICIAL MEMBER ' ' ' ' /ACCOUNTANT MEMBER / MUMBAI, :$ /DATE:20.09 .2013 SK '/ '/ '/ '/ + ++ + (,; (,; (,; (,; <';%, <';%, <';%, <';%, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR D BENCH, ITAT, MUMBAI / ;?9 (,$ . , . . . 6. GUARD FILE/ 9 @ );, (, //TRUE COPY// '/$ / BY ORDER, A / 6 ! DY./ASST. REGISTRAR , /ITAT, MUMBAI