GAURI S. SHETTY, MUMBAI V. ITO WD 3(4), KALYAN

ITA 3619/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71523 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 07-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Keywords: Unexplained cash credit; Reassessment proceedings
• Section: 133(6); 147; 68; 148; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL G GG G BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . , . , !' !' !' !' #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO, AM , AM , AM , AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.3619/MUM/2011 3619/MUM/2011 3619/MUM/2011 3619/MUM/2011 ( %& %& %& %& ' ' ' ' / ASSESSMENT YEAR :2005-06) GAURI S. SHETTY, PROP. M/S GAURI ENTERPRISES, PLOT NO. 32, NEW CHEMICAL ZONE, MIDC TALOJA, DIST. RAIGAD-410208 & & & & / VS. INCOME TAX OFFICER- WARD- 3(4) KALYAN $( !' ./ ) ./ PAN/GIR NO. :ADRPS9818G ( (* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,(* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) %& %&%& %& -. -. -. -. / 0 ! / 0 ! / 0 ! / 0 ! /ASSESSEE BY : SHRI PANKAJ SHAH $ $ $ $ / 0 ! / 0 ! / 0 ! / 0 ! / REVENUE BY : SHRI VIRENDRA OJHA & & & & / // / .' .' .' .' / DATE OF HEARING : 30 TH OCTOBER 2013 12' 12' 12' 12' / // /.' .' .' .' /DATE OF PRONOUNCEMENT: 30 TH OCTOBER 2013 #!3 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 31.1.2011 OF COMMISSIONER OF INCOME TAX(APPEALS) FO R THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN CONFIRMING THE ACTION OF THE LEARNED A.O OF REOPENING THE APPE LLANTS ASSESSMENT UNDER SECTION 147 OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE ACTION OF THE LEARNED A.O OF TREATING A SUM OF ` 14,99,387 AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTI ON 68 OF THE ACT. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE SAID SUM REPRESENTS THE APPELLANTS INCOME ON ACCOUNT OF LON G TERM CAPITAL GAINS EXEMPT UNDER SECTION 10(38) OF THE AC T. ITA NO.3619/M/2011 GAURI S. SHETTY 2 3. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 2 5.10.2005 DECLARING INCOME OF ` 4,87,870/-. THE RETURN WAS PROCESS U/S 143(1) OF THE INCOME TAX ACT ON 24.1.2006 SUBSEQUENTLY THE CASE WAS REOP EN U/S 147. IN THE REASSESSMENT PROCEEDINGS THE A.O ASKED THE ASSESSEE TO FURNISH THE DETAILS OF SHARE TRANSACTION ALONG WITH THE REASONS FOR NOT OFFERING THE PROFIT ON SALE OF SHARES AMOUNTING TO ` 14,99,386/- FOR TAXATION. THE ASSESSEE SUBMITTED THE DETAILS OF SHARE TRANSACTION S AND CLAIMS THE LONG TERM CAPITAL GAIN ARISING OUT OF 5000 SHARES OF KAY VEER ARE LTD. THE ASSESSEE CLAIMED THAT THE SHARES WERE PURCHASED AT ` 37,750/- ON 18.11.2003 WHICH WERE SOLD FOR CONSIDERATION OF ` 1 5,37,136/- ON 14.1.2005 AND THEREBY A CAPITAL GAIN OF ` 14,99,386 /- WAS EARNED BY THE ASSESSEE. THE A.O CONDUCTING AN INQUIRY REGARDING T HE GENUINENESS OF THE TRANSACTION OF PURCHASE/SALE OF SHARES. SINCE, THE STOCK BROKER M/S ALLIANCE INTERMEDIATERIES & NETWORK PVT. LTD., NSE AND BSE D ENIED HAVING SUCH TRANSACTION OF PURCHASE AND SALE OF KAY VEE ARE LTD ., THE A.O ARRIVED TO THE CONCLUSION THAT THE TRANSACTION OF SALE OF PURC HASE IS NOT GENUINE AND ACCORDINGLY THE AMOUNT OF ` 14,99,386/- CREDITED TO THE CAPITAL ACCOUNT HAS BEEN TREATED AS INCOME OF THE ASSESSEE U/S 68 O F THE INCOME TAX ACT. ON APPEAL, THE CIT(A) HAS CONFIRMED THE ACTION OF T HE A.O. 4. BEFORE US THE LD. A.R OF THE ASSESSEE HAS SUBMIT TED THAT THE A.O HAS CONDUCTED THE INQUIRY FROM NATIONAL STOCK EXCHA NGE AND BOMBAY STOCK EXCHANGE WHEREAS THE SHARES WERE PURCHASED AN D SOLD BY THE ASSESSEE THROUGH CALCUTTA STOCK EXCHANGE. THE LD. A .R HAS REFERRED THE CONTRACT NOTE AT PAGE NO. 6 & 7 OF THE PAPER BOOK A ND SUBMITTED THAT THE ITA NO.3619/M/2011 GAURI S. SHETTY 3 TRANSACTION OF PURCHASE AND SALE WERE CARRIED OUT T HROUGH M/S P. K. AGGARWAL & CO. BROKER AND AT CALCUTTA STOCK EXCHANG E. THUS, THE LD. A.R HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT CO NDUCTED A PROPER INQUIRY BECAUSE NO INQUIRY WAS CONDUCTED FROM THE C ALCUTTA STOCK EXCHANGE AND THE BROKER OF THE ASSESSEE. APART FROM THIS THE LD. A.R OF THE ASSESSEE HAS SUBMITTED THAT THE A.O ISSUED TWO NOTICES U/S 148 OF THE INCOME TAX ACT FIRST ON 1.11.2007 WHICH WAS NOT SER VED UPON THE ASSESSEE AND SECOND ON 17.7.2008. THE REASONS RECOR DED FOR ISSUING ON 1.11.2007 WERE SUPPLIED ALONG WITH THE NOTICE ISSUE ON 17.72008 THEREFORE, THE REOPENING OF THE ASSESSMENT IS NOT V ALID. ON THE OTHER HAND, THE LD. D.R HAS VEHEMENTLY OPPOSED TO THE CON TENTION OF THE ASSESSEE AND SUBMITTED THAT NO SUCH PLEA WAS TAKEN BY THE ASSESSEE EITHER BEFORE THE A.O OR BEFORE THE CIT(A) THAT THE INQUIRY HAS TO BE CONDUCTED FROM CALCUTTA STOCK EXCHANGE. HE HAS ALSO OBJECTED TO THE GROUNDS RAISED BY THE ASSESSEE AGAINST THE VALIDITY OF REOPENING AND SUBMITTED THAT THE CIT(A) HAS CONSIDERED THE CONTEN TION OF THE ASSESSEE AND DECIDED THE ISSUE AGAINST THE ASSESSEE. HE HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE A.O HAS DOUBTED THE TRANSAC TION OF PURCHASE AND SALE OF SHARES OF KAY VEE ARE LTD. WHICH CLAIMED TO HAVE RESULTED CAPITAL GAIN OF ` 14,99,386/-. THE ASSESSING OFFICER CONDUC TED THE INQUIRY AS RECORDED IN PARA 3.5 OF THE ASSESSMENT ORDER AS UND ER: ITA NO.3619/M/2011 GAURI S. SHETTY 4 3.5 IN THE MEANTIME INFORMATION U/S 133(6) WERE AL SO CALLED FOR FROM THE BROKER ALLIANCE INTERMEDIATERIES &NETWORK PVT. LTD., NATIONAL STOCK EXCHANGE OF INDIA LTD. (THROUGH WHIC H PURCHASE HAS BEEN CLAIMED TO BE MADE) AND BOMBAY STOCK EXCHA NGE (THROUGH WHICH SALES HAS BEEN CLAIMED TO BE EFFECTE D) TO ASCERTAIN THE GENUINENESS OF THE TRANSACTIONS. THE RESULT OF INFORMATION CALLED FOR U/S 133(6) OF THE I.T. ACT, 1961 IS ENUMERATED AS UNDER: (I) THE BROKER, VIDE LETTER DTD. 17.12.2008, HAS CATEGORICALLY DENIED THE PURCHASE TRANSACTION OF THE ABOVE SHARES. IN VIEW OF THE ABOVE, THE A.R OF THE ASSESSEE WAS ASKED, VIDE ORDER SHEET ENTRY DTD. 19.12.2008, TO EXPLAIN AS TO WHY THE AMOUNT CREDITED TO CAPITAL ACCOUNT ON ACCOUNT OF PROFIT ON SALE OF SHARES SHOULD NOT BE TAXED U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED CASH CREDIT AND THE CASE WAS ADJOURNED FOR HEARING ON 22.12.2008. (II) THE NATIONAL STOCK EXCHANGE OF INDIA LTD. (NSE), VIDE LETTER DTD. 19.12.2008 (RECEIVED ON 22.12.2008), HAS STATED THAT SECURITIES OF THE COMPANY KAY VEE AAR LTD. AS PER THE CONTRACT NOTE ATTACHED WITH THE LETTER IS NOT LISTED IN THE EXCHANGE AND THEREFORE NO DETAILS ARE AVAILABLE WITH THEM. (III) THE BOMBAY STOCK EXCHANGE (BSE), VIDE LETTER DTD. 19.12.2008 (RECEIVED ON 26.12.2008), HAS SUBMITTED THAT M/S P. K. AGGARWAL & CO., THE BROKER, NEITHER IS NOR WAS REGISTERED TRADING MEMBER OF BSE NOR A SEBI REGISTERED SUB-BROKER AFFILIATED TO ANY OF THE TRADING MEMBER OF BSE. FROM THE ABOVE REPLIES OF NSE AND BSE, IT BECOMES CLEAR THAT THE TRANSACTIONS OF PURCHASE/SALES OF SHARES CLAIMED BY THE ASSESSEE IS NOT GENUINE AND THEREFORE ASSESSEES CLAIM OF EARNING LTCG CAN NOT BE ALLOWED. 6. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THE I NQUIRY WAS CONDUCTED FROM THE BROKER M/S ALLIANCE INTERMEDIATERIES & NET WORK PVT. LTD., NATIONAL STOCK EXCHANGE OF INDIA LTD. AND BOMBAY ST OCK EXCHANGE REGARDING THE PURCHASE AND SALE TRANSACTION IN QUES TION. WE NOTE THAT AS ITA NO.3619/M/2011 GAURI S. SHETTY 5 PER THE CONTRACT NOTE THE SHARES WERE PURCHASED THR OUGH P. K. AGGARWAL & CO., STOCK BROKER AND THROUGH CALCUTTA STOCK EXCHAN GE THEREFORE, IT IS APPARENT THAT THE ASSESSING OFFICER HAS CONDUCTED T HE INQUIRY FROM IRRELEVANT PARTIES. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WITHOUT GOING INTO THE MERITS OF THE ISSUE WE SET ASIDE THI S ISSUE TO THE RECORD OF THE A.O TO CONDUCT A FRESH INQUIRY AND THEN DECIDE THE ISSUE AS PER LAW. AS REGARDS THE VALIDITY OF REOPENING THE A.O SHALL ALS O CONSIDER THE OBJECTION OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER 2013 SD/- SD/- ( . ) !' #$ (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( ) % #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH OCTOBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI