Smt. Joshi Dipa Bhupendrabhai, Surat V. The Income tax Officer,Ward-5(1), Surat

ITA 3999/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5681 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 31-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Cost of acquisition; Revised return; Capital Gains
• Section: 69

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MUKUL SHRAWAT, JM AND D.C.AGRAWAL, AM SMT. JOSHI DIPA BHUPENDRABHAI (ALIAS HORA DIPA JATINBHAI), AMBAJI MANDIR, AMBAJI ROAD, SURAT. VS . THE INCOME-TAX OFFICER, WARD 5(1), SURAT. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE (WRITTEN SUBMISSIONS) RESPONDENT BY:- SHRI K. MADHUSUDAN, SR.DR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS :- (1) THE LEARNED CIT (APPEALS)-III. SURAT HAS ERRED IN CONFIRMING THE ORDER OF THE ITO WARD 5(1), SURAT IN MAKING ADDITIO N TO THE EXTENT OF RS. 2,42,221/- ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENTS IN SHARES. (2) THE LEARNED CIT (APPEALS)-III, SURAT OUGHT T O HAVE FIND THAT THE ITO WARD -5(1). SURAT HAS ERRED IN PRESUMING THE INVEST MENTS ALLEGEDLY TO HAVE BEEN MADE BY THE APPELLANT IN SHARES WITHOU T BRINGING OUT ANY EVIDENCE OR MATERIAL ON HIS RECORDS IN SUPPORT OF .SUCH ALLEGATION FOR INVESTMENTS MADE DURING THE YEAR AND HENCE, NOT JUSTIFIED, (3) THE LEARNED CIT (APPEALS)-III, SURAT HAS ER RED IN OVERLOOKING AND IN SUMMARILY REJECTING THE DETAILED STATEMENT OFFSE TS SUBMITTED ITA NO.3999/AHD/2007 ASST. YEAR :2004-05 2 ALONG WITH MEMORANDUM OF APPEAL, VARIOUS DOCUMENTS AND EVIDENCES PLACED BEFORE HIM DURING THE COURSE OF HE AVING WHILE ACCEPTING THE LOP-SIDED AND FACTUALLY INCORRECT VER SION OF THE LEARNED AO. (4) BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPR ECIATE THAT THE PROVISIONS OF SECTION 69 OF THE ACT IS NOT APPLICAB LE IN THE APPELLANT'S CASE FOR THE YEAR UNDER APPEAL BECAUSE OF NO INVESTMENTS MADE BY THE APPELLANT IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR UNDER APP EAL IGNORING THE BELIEVABLE AND AUTHENTIC EVIDENCES SUCH AS DEMA T ACCOUNT FILED TO SUBSTANTIATE THE EXPLANATIONS OF THE APPELLANT A S TO THE NATURE AND SOURCES OF SUCH INVESTMENTS, THROUGH WILL OR GIFTS IN THE EARLIER YEARS FROM HER PARENTS I.E. PREVIOUS OWNER OF THE A SSETS AND NOT DURING THE YEAR UNDER APPEAL. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS SUSTAI NING AN ADDITION OF RS.2,42,221/- ON ACCOUNT OF ALLEGED UNEXPLAINED INV ESTMENT IN SHARES. 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS DECLAR ED SHORT-TERM CAPITAL GAIN OF RS.2,53,260/- AND LONG TERM CAPITAL GAIN OF RS.16,524/-. THE AO REQUIRED FOLLOWING DETAILS FROM THE ASSESSEE:- (I) DETAILS OF DEMATE ACCOUNT WITH COPY OF ACCOUNT. (II) NAME AND ADDRESS SHARE BROKER THROUGH WHOM TRANSACT IONS OF SHARES HAVE BEEN MADE BY THE ASSESSEE. (III) COPY OF CONTRACT IN WHICH RESPECT TRANSACTIONS ARE SHOWN. (IV) DETAILS OF DIVIDEND RECEIVED ON EACH SCRIPT. (V) DETAILS OF SHARE/BOND/OTHER INVESTMENT MADE IN THE NAME OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FURNISHED REQUIRED DETAILS. ON THEIR E XAMINATION THE AO NOTICED THAT SALE OF SHARES OF THE VALUE OF RS.11,6 5,143/- HAS NOT BEEN FOUND RECORDED IN THE BOOKS OF ACCOUNTS. THE LIST O F SHARES IS GIVEN BY THE AO ON PAGES 3 & 4 OF HIS ORDER. HE FOUND THAT THESE SHARES WERE SOLD BY 3 THE ASSESSEE OUTSIDE THE BOOKS AND CAPITAL GAINS TH EREON HAVE NOT BEEN OFFERED FOR TAXATION. ON REALIZING THIS, THE ASSESS EE FILED REVISED RETURN INCLUDING CAPITAL GAINS THEREON. IT WORKED OUT CAPI TAL GAINS OF RS.3,90,391/-. THE ASSESSEE DID NOT PRODUCE BOOKS O F ACCOUNT DURING THE COURSE OF ASSESSMENT PROCEEDINGS EVEN THOUGH AO HAD CALLED FOR THE SAME. NO SPECIFIC DETAILS REGARDING SOURCE OF INVES TMENT IN SHARES FOR THE YEAR UNDER CONSIDERATION AND INVESTMENT MADE THEREI N WERE FURNISHED. THE ASSESSEE EXPLAINED THAT THIS MISTAKE HAS BEEN D ONE BY PREVIOUS TAX CONSULTANT WHO HAS NOT PRODUCED THE BOOKS OF ACCOUN T. THE AO THEN WORKED OUT THAT ASSESSEE HAD PURCHASED SHARES AT RS .2,87,604/- AND SOLD AT RS.3,06,770/-. ACCORDING TO THE AO THERE WAS UND ISCLOSED INVESTMENT OF RS.2,87,604/- THIS YEAR. IN ADDITION TO THIS, IT WAS CLAIMED THAT ASSESSEE HAD RECEIVED SHARES WORTH RS.2,42,221/- AS GIFT OR AS PER WILL. THE AO REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF THE GIFT OR WILL BUT NO SUCH DETAILS WERE FURNISHED. NOT FINDING ANY EVIDENCE IN SUPPORT OF THE ACQUISITION OF SHARES SOLD OUTSIDE THE BOOKS THE AO PROPOSED AN ADDITION OF RS.2,87,604/- AND OF RS.2,42,221/-. THE LD. CIT( A) DELETED THE ADDITION OF RS.2,87,604/- ON THE GROUND THAT PURCHASES ARE D EBITED IN THE RELEVANT BANK ACCOUNT. HOWEVER, LD. CIT(A) CONFIRMED THE ADD ITION OF RS.2,42,221/- ON THE GROUND THAT ASSESSEE WAS UNABL E TO FURNISH ANY EVIDENCE IN RESPECT OF HER CLAIM THAT THESE SHARES WERE RECEIVED BY HER BY WAY OF WILL OR GIFT. AN AFFIDAVIT FILED BY THE ASSE SSEE IN THIS REGARD WAS REJECTED AS IT WAS NOT CONSIDERED TO BE A SUFFICIEN T PROOF. 4. BEFORE US, THE ASSESSEE HAS FILED APPEAL AGAINST SUSTAINING ADDITION OF RS.2,42,221/-. WRITTEN SUBMISSIONS HAVE BEEN FIL ED ACCORDING TO WHICH IT WAS ARGUED THAT THESE SHARES WERE OPENING BALANC E AS ON 1.4.2003, THEREFORE, THEIR INVESTMENT COULD NOT BE ADDED IN A SST. YEAR 2004-05. 4 SECONDLY THESE SHARES WERE RECEIVED THROUGH WILL OR GIFT YEARS BACK. THIRDLY, ASSESSEE HAD WORKED OUT INDEX COST OF ACQU ISITION AT RS.2,42,221/- WHOSE DETAILS ARE GIVEN AT PAGE 109 O F THE PAPER BOOK. THERE CANNOT BE ANY COST OF ACQUISITION IN THE F.Y. SINCE CONDITION LAID DOWN UNDER SECTION 69 ARE NOT SATISFIED ADDITION CA NNOT BE MADE THEREIN. 5. AGAINST THIS, LD. DR RELIED ON THE ORDERS OF AUT HORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE CLAIM OF THE ASSESSEE THAT SHARES WERE ACQUIRED BY HER THROUGH GIFT OR WILL REMAINED UNSUPPORTED. NO EVIDENCE OF GIFT OR WILL HAS BEEN FILED. THEREFORE, THEIR ACQUISITION PRIOR TO THE F.Y. COULD NOT BE ACCEPTED. THE ONLY ISSUE R EMAINS IS VALUATION OF COST OF PURCHASE. IT IS UNDISPUTEDLY TRUE THAT SUM OF RS.2,42,221/- IS THE INDEX COST OF PURCHASES ON THE BASIS OF THEIR COST AS ON 1.4.1981. THEREFORE, IT IS NECESSARY TO WORK OUT ACTUAL COST OF ACQUISITION OF THESE SHARES. IT IS FOR THE ASSESSEE TO SHOW AS TO WHEN T HE SHARES WERE TRANSFERRED IN THE NAME OF ASSESSEE. WHERE SHARES W HICH WERE TRANSFERRED IN THE NAME OF ASSESSEE PRIOR TO F.Y. RELEVANT TO A SST. YEAR 2004-05 NO ADDITION FOR COST OF ACQUISITION OF SUCH SHARES CAN BE CONSIDERED IN ASST. YEAR 2004-05. IN CASE OF THOSE SHARES WHERE ASSESSE E FAILS TO SHOW AS TO WHEN THEY WERE ACQUIRED AND/OR WHEN THEY WERE TRANS FERRED IN HER NAME IN THE REGISTER OF THE COMPANIES, THE MARKET VALUE OF THE SHARES AS ON FIRST DATE OF F.Y. WILL BE THE COST OF ACQUISITION OF THO SE SHARES. WITH THIS DIRECTION, WE RESTORE THE MATTER TO THE FILE OF AO FOR WORKING OUT THE FRESH COST OF ACQUISITION FOR THE PURPOSE OF TAXING IT UN DER SECTION 69 IN ACCORDANCE WITH OUR OBSERVATIONS MADE ABOVE. 5 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED BUT FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 02/07/2010 SD/- SD/- (MUKUL SHRAWAT) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 02/07/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD