Girish Saga, Agra V. The C.I.T.-1, Agra

ITA 379/AGR/2010

• Counselvise Citation: 37920314 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-10-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 15-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C AGARWAL
• Keywords: Share purchase agreement; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 379/AGRA/2010 ASSTT. YEAR : 2002-03 GIRISH SAGAR S/O SRI GYAN MURTI SAGAR, VS. THE COM MISSIONER OF 153, JAIPUR HOUSE, AGRA. INCOME-TAX-1, AGRA. (PAN : ADBPS 5569 E) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K.C. AGARWAL, ADVOCATE FOR RESPONDENT : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT : 18.10.2011 ORDER PER B.C. MEENA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING O UT OF THE ORDER DATED 10.08.2010 OF LD. CIT-I, AGRA PASSED U/S. 263 OF THE INCOME-TAX ACT. 2. THE RELEVANT FACTS, IN BRIEF, ARE THAT IN THIS C ASE, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 25.03.2004 AT AN INCOME O F RS.14,88,730/-. SUBSEQUENTLY, PROCEEDINGS U/S. 147 OF THE ACT WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. NOTICE U/S. 148 WAS ISSUED AFTER RECORDING THE REAS ONS THAT THE INCOME TO THE TUNE OF RS.2,10,422/- ON ACCOUNT OF BOGUS SALES OF SHARES H AS ESCAPED ASSESSMENT. IN RESPONSE THERETO, THE ASSESSEE FURNISHED THE REPLY STATING THAT THE A SSESSEE HAS ALREADY BEEN ASSESSED U/S. 143(3) VIDE ORDER DATED 25.03.2004 FOR THE YEAR UNDER CONS IDERATION AND THE ASSESSING OFFICER AFTER DULY VERIFYING AND CONSIDERING ALL THE FACTS AND EVIDENC E HAS ACCEPTED THE LONG TERM CAPITAL GAIN OF ITA NO. 379/AGRA/2010 2 RS.4,65,565/- ON THE SALE OF SHARES WHICH WAS INCLU DED IN THE DECLARED INCOME OF THE ASSESSEE. THEREFORE, THERE WAS NO REASON TO BELIEVE THAT ANY INCOME WAS ESCAPED FROM ASSESSMENT. NOTICE U/S. 142(1) WAS ALSO ISSUED TO THE ASSESSEE, IN RES PONSE TO WHICH ALSO, THE ASSESSEE GAVE SIMILAR REPLY. IT WAS ALSO STATED THAT ALL THE RELEVANT PAP ERS PERTAINING TO THE SHARE TRANSACTIONS WERE FURNISHED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AN D AFTER DUE CONSIDERATION THEREOF, THE INCOME FROM CAPITAL GAINS HAS BEEN ACCEPTED BY THE ASSESSI NG OFFICER. AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE, THE ASSESSING OFFICER DROPPED THE REASSESSMENT PROCEEDINGS INITIATED US. 147 OF THE ACT VIDE ORDER DATED 24.09.2009. THE LD. CIT-I, AGRA CANCELLED THE ORDER DATED 24.09.2009 DROPPING THE PROCEEDINGS US. 147 BY INVOKING THE PR OVISIONS OF SECTION 263 OF THE ACT HOLDING THAT THE SAME WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASON THAT THE ASSESSING OFFICER HAS DROPPED THE PROCEEDINGS W ITHOUT MAKING PROPER INQUIRY AND DID NOT VERIFY THE SALE TRANSACTIONS OF THE SHARES. 3. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTIONS MADE BEFORE THE LD. AUTHORITIES BELOW AND THE LD. DR RELIED ON THE ORDER OF CIT-1, AGRA PASSED U/S. 263 OF THE ACT. 4. WE HAVE HEARD BOTH THE SIDES AND HAVE PERUSED TH E ENTIRE MATERIAL AVAILABLE ON RECORD. A PERUSAL OF RECORD SHOWS THAT DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3), THE ASSESSING OFFICER RAISED QUERY IN RESPECT OF CAPITAL GAINS BY ISSUING NOTICE U/S. 143(2)/142(1) DATED 14.10.2003 TO PRODUCE THE EVIDENCE REGARDING PURCHA SE AND SALE OF SHARES, THEIR DISTINCTIVE NUMBERS, DATE OF TRANSFER IN COMPANYS REGISTER WHO SE SHARES HAVE BEEN SOLD, P.A. NUMBER OF THE BROKER THROUGH WHICH THE SHARES HAVE BEEN SOLD, COM PLETE POSTAL ADDRESS OF THE COMPANIES ETC. THE RECORD ALSO SHOWS THAT THE ASSESSEE HAD FURNISH ED REPLY DATED 04.11.2003 IN RESPONSE TO THIS ITA NO. 379/AGRA/2010 3 NOTICE U/S. 143(2)/142(1), WHICH SHOWS THAT THE ASS ESSEE HAD FURNISHED ALL THE REQUISITE DOCUMENTS WITH RESPECT OF SHARE TRANSACTIONS IN QUE STION. THE RELEVANT PORTION OF THE REPLY OF ASSESSEE READS AS UNDER : THE COPIES OF THE SHARE CERTIFICATES IN RESPECT OF LONG TERM CAPITAL GAINS EARNED ON THE SALE OF SHARES ARE BEING FILED. THE A SSESSEE SOLD 1100 + 1300 = 2400 SHARES OF M/S. GOYAL ACHAL SAMPATTI IN MAY, 20 01 THROUGH TWO SHARE BROKERS, VIZ., M/S. SINGHAM FINANCIAL SERVICES LIMI TED, 3406, 3 RD FLOOR, D.B. GUPTA ROAD, KAROL BAGH, NEW DELHI FOR RS.2,19,450/- AND 1300 SHARES THROUGH KRISHNA STOCK BROKING CO., 34, SAHEED MARKET, NEW D ELHI FOR RS.2,58,635/-. THESE SHARES WERE PURCHASED IN THE MONTH OF APRIL, 2000 FOR RS.11,424/-. THE COPIES OF SHARE CERTIFICATES, DULY TRANSFERRED IN A SSESSEES NAME, ARE BEING FILED. ALL PAPERS HAVE ALREADY BEEN FILED. POSTAL ADDRESS OF THE COMPANY HAS ALREADY BEEN GIVEN ON THE SHARE CERTIFICATES. 5. IN VIEW OF THE ABOVE QUERY AND ITS REPLY IN THE ORIGINAL ASSESSMENT PROCEEDINGS, IN OUR OPINION, THE LD. CIT-1, AGRA WAS NOT JUSTIFIED TO O BSERVE THAT NEITHER THE ASSESSING OFFICER RAISED AND QUERY ABOUT THE ISSUE IN QUESTION NOR DID THE A SSESSEE FURNISH ANY EXPLANATION REGARDING SUCH ISSUE. IT IS APPARENTLY CLEAR THAT THE ASSESSMENT H AS BEEN FINALIZED U/S. 143(3) AFTER MAKING PROPER INVESTIGATION ON THE ISSUE. THE ASSESSING OFFICER A PPEARS TO HAVE CONSIDERED AND EXAMINED ALL THE RELEVANT PAPERS AND THE SUBMISSIONS OF THE ASSE SSEE AND THEN ONLY AFTER BEING SATISFIED THE PROCEEDINGS INITIATED U/S. 147 OF THE ACT HAVE BEE N DROPPED. IN CIT VS. ARVIND JEWELLERS, 259 ITR 502 (GUJ), HONBLE GUJRAT HIGH COURT AFTER FOLL OWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT (2000) 243 ITR 83 (SC) HAS HELD AS UNDER:- IT IS THE FINDING OF FACT GIVEN BY THE TRIBUNAL TH AT THE ASSESSEE HAS PRODUCED RELEVANT MATERIAL AND OFFERED EXPLANATION IN PURSUANCE OF THE NOTICES ISSUED UNDER S. 142(1) AS WELL AS S. 143(2) AND AFT ER CONSIDERING THOSE MATERIALS AND EXPLANATION, THE ITO HAS COME TO A DEFINITE CON CLUSION. THE CIT DID NOT AGREE WITH THE CONCLUSION REACHED BY THE ITO. SEC. 263 DOES NOT EMPOWER HIM TO ITA NO. 379/AGRA/2010 4 TAKE ACTION ON THESE FACTS TO ARRIVE AT THE CONCLUS ION THAT THE ORDER PASSED BY THE ITO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE MATERIAL WAS THERE ON RECORD AND THE SAID MATERIAL WAS CONSIDERED BY THE ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW CAN BE TAKEN, SHOULD NOT BE THE BASIS FOR AN ACTION UNDER S.263 A ND IT CANNOT BE HELD TO BE JUSTIFIED. HAVING REGARD TO THE FACTS AND CIRCUMST ANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE CIT UNDER S. 263. MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1: (2000) 243 ITR 83 (SC) FOLLOWED. 6. IN VIEW OF THE ABOVE FACTS AND THE DECISIONS REN DERED BY HONBLE GUJRAT HIGH COURT AND SUPREME COURT, THE NOTICE ISSUED BY THE CIT(A) U/S. 263 IS NOT SUSTAINABLE. THEREFORE, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.10.2011. SD/- SD/- (H.S. SIDHU) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 18 TH OCTOBER, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY