ALMATH TEXTILES P. LTD, MUMBAI V. ACIT 6(1), MUMBAI

ITA 4/MUM/2010

• Counselvise Citation: 419914 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHSARTHI NAIK
• Assessee Lawyers: K SHIVALAM
• Keywords: Opportunity of being heard

Judgement Text

1 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHIRI D. K. AGARWAL, J.M. AND SHRI RAJENDRA SINGH, A.M. ITA NO. : 04/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. ALMATH TEXTILES P. LTD. 11/A, HARI BHAVAN, 3 RD FLOOR, ZAVER ROAD, NEXT TO JAIN TEMPLE, MULUND(W), MUMBAI-400 080 PAN NO: AABCA 0608 C VS. A.C.I.T. 6(1) AAYAKAR BHAWAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SHIVALAM RESPONDENT BY : SHRI PARTHSARTHI NAIK DATE OF HEARING : 03.11.2011 DATE OF P RONOUNCEMENT : 16.11.2011 ORDER PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.11.2009 OF THE LD. CIT(A) FOR THE ASSESSMENT YEA R 2006-07. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS RE GARDING ADDITION OF `. 45,45,853/- BY AO U/S.68 OF THE I.T. ACT AGAINST TH E LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE. 2 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD DECLARED A LONG TERM CAPITAL GAIN OF `. 45,45,853/- FROM SALE OF SHARES OF RELIANCE INDUSTR IES LTD. AND ALOK INDUSTRIES LTD. IN THE MONTH OF JANUARY AN D MARCH, 2006. THE AO ASKED THE ASSESSEE TO FILE COPIES OF CONTRACT NO TES AND THE COPY OF DEMAT A/C. THE ASSESSEE, HOWEVER, EXPLAINED THAT S HARES SOLD WERE HELD IN PHYSICAL FORM AND NOT IN DEMAT FORM. THE AO SOUGHT INFORMATION FROM BSE AS WELL AS FROM THE SHARE BROKER I.E. KAMAL KUMAR J ALAN SECURITIES PVT. LTD. WHO CONFIRMED THAT THE SHARES OF RELIANCE INDU STRIES LTD. HAD BEEN SOLD ON 17.01.2006 AND THOSE OF ALOK INDUSTRIES LTD . ON 23.03.2006 AND 24.03.2006. THE DETAILS WERE GIVEN AS UNDER : DATE OF TRANS. ORDER NO. TRADE NO. TRADE TIME NAME OF SECURITY QTY. AMOUNT SETT. NO. 07.01.2006 20107444037 37205 12:33:50 REL. IND. LTD 1900 1719415 2005/203 23.03.2006 20109407037 561,562 15:27:18 ALOK IND. LTD 35000 2445073 2005/247 24.03.2006 20109446037 115,116,117 11:32:23 11:32:38 ALOK IND. LTD 32000 2261065 2005/248 2.1 THE AO, HOWEVER, OBSERVED THAT THE SHARES SOLD BY THE ASSESSEE WERE COMPULSORY REQUIRED TO BE TRANSACTED THROUGH DEMAT A/C ONLY AND PHYSICAL DELIVERY OF THE SHARES WAS NOT POSSIBLE SINCE THE T RANSACTION HAS BEEN DONE THROUGH THE STOCK EXCHANGE. THE AO DID NOT BELIEVE THE CLAIM OF THE ASSESSEE THAT THE SHARES WERE SOLD IN PHYSICAL FORM . THE AO OBSERVED THAT THE ASSESSEE DELIBERATELY DID NOT FILE THE DETAILS OF DEMAT A/C, AS THE TRANSACTIONS WERE MURKY. HE, THEREFORE, DID NOT ACC EPT THE GENUINENESS OF 3 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. SALE OF SHARES AND ENTIRE SALE CONSIDERATION OF `. 47,06,139/- WAS ADDED AS INCOME OF THE ASSESSEE U/S. 68 OF THE ACT. 3. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAD BEEN HOLDING T HE SHARES FOR MORE THAN LAST EIGHT YEARS AND THESE WERE DULY SHOWN IN THE A UDITED ACCOUNTS OF THE EARLIER YEARS. THE ASSESSEE HAD SOLD THE SHARES THR OUGH STOCK EXCHANGE MEMBER ON THE BSE WHO HAD CONFIRMED THE TRANSACTION S. THE ASSESSEE HAD ALSO PAID SHARE TRANSACTION TAX. THE LD. CIT(A) HOW EVER DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THAT THE SHARES HAD BEEN SOLD THROUGH THE STOCK EXCHANGE AND, THEREFORE, THE ASSE SSEE WAS REQUIRED TO MAINTAIN THE DEMAT A/C. AND IT SHOULD HAVE GIVEN TH E DETAILS OF THE DEMAT A/C., IN CASE THE TRANSACTIONS WERE GENUINE. FURTHE R, THE ASSESSEE ADMITTED THAT THE SHARES WERE IN PHYSICAL FORM AND, THEREFOR E, THESE COULD NOT HAVE BEEN SOLD THROUGH THE STOCK EXCHANGE. THE LD. CIT(A ), THEREFORE, CONFIRMED THE ORDER OF THE AO IN TREATING THE TRANSACTION AS NOT GENUINE. AGGRIEVED BY THE SAID DECISION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SOLD THE SHARES TO THE BROKER IN THE PHYSICAL F ORM, WHO LATER GOT IT DEMATERIALISED AND SOLD TO THE STOCK EXCHANGE. IN R ESPONSE TO THE QUERY FROM THE BENCH THAT IN CASE SHARES WERE SOLD IN PHY SICAL FORM, THE ASSESSEE WAS REQUIRED TO GIVE THE DETAILS OF CERTIFICATE NUM BER AND DISTINCTIVE 4 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. NUMBERS OF SHARES SOLD TO BROKER. THE LD. AR FOR TH E ASSESSEE SUBMITTED THAT THIS ASPECT WAS NOT INQUIRED AND, IF ALLOWED, THE ASSESSEE WAS READY TO OBTAIN THE DETAILS FROM THE BROKER OR THE CONCERNED COMPANIES, AND THE MATTER BEING OLD, RECORDS WERE NOT AVAILABLE WITH T HE ASSESSEE. THE LD. DR ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND PLACED RELIANCE ON THE FINDINGS GIVEN IN THE RE SPECTIVE ORDERS. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF AMO UNT RECEIVED BY THE ASSESSEE FROM SALE OF SHARES AS INCOME OF THE ASSES SEE U/S.68 OF THE I.T. ACT. THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GA IN OF `. 45,45,853/- FROM SALE OF SHARES OF RELIANCE INDUSTRIES LTD. AND ALOK INDUSTIRES LTD. THE ASSESSEE GAVE DATE-WISE AND TIME-WISE DETAILS OF SH ARES SOLD WHICH HAS BEEN REPRODUCED IN PARA 2 EARLIER. THE SHARES WERE SOLD THROUGH THE BROKER I.E. KAMAL KUMAR JALAN SECURITIES PVT. LTD. AND BSE AND BOTH THE PARTIES HAD CONFIRMED THE TRANSACTIONS. HOWEVER, THE DISCRE PANCY POINTED OUT BY THE AUTHORITIES BELOW ARE THAT THE ASSESSEE HAS CLA IMED TO HAVE HELD THE SHARES IN THE PHYSICAL FORM AND, THEREFORE, THESE C OULD HAVE BEEN SOLD THROUGH THE STOCK EXCHANGE, AS TRADING IN THESE SHA RES WAS COMPULSORY IN DEMAT FORM. THE ASSESSEE, HOWEVER, DID NOT PRODUCE DETAILS OF THE DEMAT A/C. THE ASSESSEE HAS CLAIMED THAT IT HAD SOLD THE SHARES IN THE PHYSICAL FORM TO THE BROKER WHO HAD GOT IT DEMATERIALISED AN D SOLD THROUGH THE STOCK EXCHANGE. IT IS POSSIBLE TO SELL THE SHARES I N THE PHYSICAL FORM IN THE 5 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. OFF-MARKET TRADE. HOWEVER, IN SUCH CASES, THE ASSES SEE IS REQUIRED TO ISSUE THE SALE BILL AND DELIVERY CHALLAN GIVING THE CERTI FICATE NO. AND DISTINCTIVE NUMBERS OF THE SHARES SOLD. SUCH DETAILS ARE NOT AV AILABLE WITH THE ASSESSEE. THE LD. AR FOR THE ASSESSEE SUBMITTED THA T THE MATTER BEING OLD, DETAILS ARE NOT AVAILABLE. HOWEVER, IT HAS ALSO BEE N SUBMITTED THAT HE WILL TRY TO COLLECT THE DETAILS FROM THE BROKER OR THE C ONCERNED COMPANIES, FOR WHICH TIME MAY BE ALLOWED. THIS ASPECT HAS NOT BEEN EXAMINED BY THE LOWER AUTHORITIES. IN OUR VIEW, FOR ARRIVING AT A FAIR CONCLUSION, IT IS NECESSARY THAT THE MATTER BE EXAMINE AFRESH AFTER O BTAINING THE NECESSARY DETAILS. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR PASSING AFRESH ORD ER AFTER NECESSARY EXAMINATION IN THE LIGHT OF THE OBSERVATIONS MADE A BOVE AND AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 16 TH DAY OF NOVEMBER, 2011. SD/- SD/- ( D.K. AGARWAL ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 6 ITA NO. 04/MUM/2010 M/S. ALMATH TEXTILES P. LTD. COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, A- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI