ACIT, New Delhi V. Sh. P.K.N. Nambira, New Delhi

ITA 4000/DEL/2009

• Counselvise Citation: 400020114 RSA 2009
• Duration Of Justice: 5 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 24-11-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: V MOHAN
• Keywords: Question of law; Assessment record
• Section: 143(3); 133(6); 131; 68

Judgement Text

ITA NO. 4000/ DEL/ 2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. N O. 4000/DEL/2009 A.Y. : 2004 - 05 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 22(1), NEW DELHI VS. SH. PKN NAMBI R A , A - 136, DDDA SHEDS, OKHLA INDL. AREA, PHASE - I, NEW DELHI (PAN: ABNPN6370Q) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. VIKRAM SAHAY, SR. D.R. ASSESSEE BY : SH. VED JAIN & SH. V. MOHAN, CA DATE OF HEARING : 24 - 11 - 2014 DATE OF ORDER : 28 - 11 - 2014 ORDER PER H.S. SIDHU : J M TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) - XX III , NEW DELHI DATED 15 . 7 .20 09 P ERTAINING TO ASSESSMENT YEAR 2004 - 05. ITA NO. 4000/ DEL/ 2009 2 2. THE GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 9,38,920/ - ON ACCOUNT OF BOGUS LONG TERM CAPITAL GAINS. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 28,71,564/ - ON ACCOUNT OF FRESH UNVERIFIABLE CREDITORS. 3. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN MISCONSTRUING THE REMAND REPORT OF THE AO. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, HAVING A PROPRIETARY CONCERN IN THE NAME OF M/S ELECTRO SPARE. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND MAINLY DERIVES INCOME FROM DOING JOB WORK ON CNC MACHINES. I T IS ALSO ENGAGED IN THE BUSINESS OF SHEET METAL COMPONENTS. RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 26.10.2004 VIDE ITA NO. 4000/ DEL/ 2009 3 ACKNOWLEDGEMENT NO. 2251000264. THE RETURNED INCOME WAS RS. 70,78,647/ - . NOTICE U/S. 143(2) WAS ISSUED ON 26.10.2004, WHICH EVENTU ALLY CULMINATED INTO AN ORDER U/S. 143(3) ASSESSING OFFICER DATED 29.12.2006 AND MADE THE ADDITIONS. 4. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BEFORE THE LD. CIT(A). LD. CIT(A) ELABORATELY DISCUSSED THE ISSUES IN HIS ORDER AND ACCORDINGLY, DELE TED THE ADDITIONS MADE BY THE AO BY PARTLY ALLOW ING THE ASSESSEE S APPEAL VIDE ORDER DATED 15.7.2009. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 7. WITH REGARD TO ADDITIO N OF RS. 9,38,920/ - , WE FIND THAT ASSESSEE HAS CLAIMED THAT IT HAD ACQUIRED 10000 SHARES OF M/S TECH DNA SOLUTION LTD. ON 4.9.2002. THE AO DURING THE COURSE OF ASSESSMENT HAD SPECIFICALLY REQUESTED FOR THE CONTRACT NOTE FOR PURCHASE AND SALE OF THE SHA RES. THE ASSESSEE COULD NOT SUBMIT THE COPY OF THE CONTRACT NOTE TO THE AO FOR PURCHASE OF SHARES. WE FIND AO HAS OBSERVED THAT THAT THE BROKER IN THE SALE WAS ONE M/S DIWAKAR SECURITIES LTD., WHO COULD NOT BE TRACED DURING THE ASSESSMENT PROCEEDINGS. A S SUCH, THE AO PROCEEDED TO TREAT THE SAID TRANSACTION AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. WE FIND THAT LD. CIT(A) HAS GONE THROUGH THE DETAILS SUBMITTED BY THE ASSESEE ALONGWITH PAPER BOOK; REMAND REPORT AND ITA NO. 4000/ DEL/ 2009 4 REJOINDER FILED BY THE ASSESSE E. THE PAPER BOOK SUBMITTED BY THE ASSESSEE WAS VETTED BY THE AO DURING REMAND STAGE. PAGE NO. 37 OF THE PAPER BOOK INDICATES THAT THE DEMAT ACCOUNT OF THE ASSESSEE WAS WITH GLOBE CAPITAL MARKET LTD., VIDE CLIENT ID NO. 10067256. THIS CONTAINS THE CO PY OF THE TRANSACTION STATEMENT FOR THE PERIOD 1.4.2002 TO 31.3.2004 AND INDICATES THAT DURING THIS PERIOD TRANSACTIONS IN TWO EQUITIES HAD TAKEN PLACE. ONE WAS PERTAINING TO CHAMBAL FERTILIZERS LTD. AND THE SECOND ONE PERTAINS TO M/S TECH DNA SOLUTIONS LTD.. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT VIDE TRANSACTION NO. 6444307, THE SHARES OF M/S TECH DNA SOLUTIONS LTD. WERE CREDITED TO THE DEMAT ACCOUNT OF THE ASSESSEE ON 17.9.2002. SUBSEQUENTLY, VIDE TRANSACTION NO. 560339, 10000 SHARES OF THE SAI D TECH. DNA SOLUTIONS LTD. WAS DEBITED FROM THE ACCOUNT ON 27.12.2003. AT PAGE NO. 38 IS THE CONFIRMATION FROM GOMATI CAPITAL PVT. LTD. FROM 20.12.2006 WHICH SUGGESTS THAT IT HAD SOLD ITS SHARES TO THE ASSESSEE. WE FIND THAT LD. CIT(A) ALSO OBSERVED TH AT AT PAGE NO. 40 OF THE PAPER BOOK IS THE DELIVERY INSTRUCTIONS WHICH CLEARLY INDICATES THAT THE DEPOSITARY WAS M/S GLOBE CAPITAL MARKET LTD. AND THAT THE SALE OF SHARES WAS ON 27.12.2003. THIS HAD APPARENTLY ALSO BEEN PRODUCED BEFORE THE AO DURING THE ASSESSMENT S T AGE. PAGE 41 OF THE PAPER BOOK (ALSO PERUSED BY THE AO) IS CONFIRMATION FORM M/S DIWARKAR SECURITIES LTD. WE FIND TO VERIFY THE DOCUMENTS, LD. CIT(A) HAS MADE AN ENQUIRY FROM THE AO, WHO IN TURN SUBMITTED HER REPORT. ITA NO. 4000/ DEL/ 2009 5 WE FIND THAT LD. CIT(A) W ITH REGARD TO ENQUIRY WITH M/S GLOBAL CAPITAL MARKET LTD. HAS OBSERVED THAT THE AO HAS ENCLOSED A LETTER DATED 22.6.2009 FROM THE DEPOSITARY WHO HAVE ANNEXED THE ACCOUNT OF THE ASSESSEE. THIS WAS FOR THE PERIOD 1.4.2002 TO 31.3.2004. IT CLEARLY SHOWS THAT 10,000 SHARES OF M/S TECH DNA SOLUTIONS LTD. WERE CREDITED TO THE ACCOUNT OF THE ASSESSEE ON 17.9.2002 (TRANSACTION NO. 6444307) AND DEBITED ON 27.12.2003 (TRANSACTION NO. 560339). WE FIND THAT LD. CIT(A) HAS OPINED THAT IN VIEW OF THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE DID NOT HOLD THE SHARE OF M/S TECH DNA SOLUTIONS LTD. FOR A PERIOD OF MORE THAN 12 MONTHS. THE SHARES WERE IN HIS DEMAT ACCOUNT. AS SUCH, THE ASSESSEE IS ELIGIBLE TO CLAIM LONG TERM CAPITAL GAIN ON THE PURCHASE AND SALE OF 10000 SHARES OF M/S TECH DNA SOLUTIONS LTD. WE FIND THAT LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE ASSESSING OFFICER IS MISCONCEIVED IN HER CONCLUSIONS THAT OFF MARKET SHARE DEALINGS ARE NOT PERMISSIBLE IN DEMAT ACCOUNT. BOTH MARKET AND OFF MARKET SHARE TRANSAC TIONS ARE BY LAW, PERMITTED TO BE CREDITED TO AND DEBITED TO THE DEMAT ACCOUNT. LD. CIT(A) HAS ALSO OBSERVED THAT DOCUMENTS ALSO INDICATE THAT THE TRANSACTION(S) CANNOT BE ON ACCOMMODATION ENTRY. THEREFORE, LD. CIT(A) OPINED THAT THE ASSESSEE SUCCEEDS IN THIS GROUND. IN VIEW OF THE ABOVE, WE FIND THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 9,38,920 - , WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE SAME IS UPHELD. ITA NO. 4000/ DEL/ 2009 6 8. WITH REGARD TO ADDITION OF RS. 28,71,564/ - REGARDING FRESH UNSE CURED LOANS , WE FIND THAT AO HAS OBSERVED IN HIS ASSESSMENT ORDER THAT ASSESEE HAS ONLY FILED CONFIRMATION AND COPY OF THE INCOME TAX RETURN AND HAS NOT FURNISHED THEIR BANK ACCOUNT IN ORDER TO VERIFY THE IDENTITY OF THE PERSON, CAPACITY OF SUCH PERS ON TO ADVANCE MONEY AND LASTLY GENUINENESS OF THE TRANSACTION. WE FIND THAT AO HAS ALSO OBSERVED THAT ASSESSEE HAS NOT FURNISHED COPY OF ACCOUNT OF THEM IN HIS BOOKS OF ACCOUNTS AND ALSO COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF PARTIES FROM WHOM L OANS HAVE BEEN TAKEN. THEREFORE, ASSESSING OFFICER ADDED RS. 28 , 71,564/ - TO THE TOTAL INCOME OF THE ASSESSEE U/S. 68 OF THE I.T. ACT ON ACCOUNT OF FRESH UNSECURED LOANS. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT THE GROUND ON WHICH THE ADDITION HAD BEEN MADE IS THAT THE ASSESSEE COULD NOT PRODUCE THE BANK ACCOUNT OF THE CREDITORS SO THAT THE IDENTITY AND CREDIT WORTHINESS OF THE PERSON AND THE GENUINENESS OF THE TRANSACTIONS COULD BE ESTABLISHED. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT ON PERUSAL O F THE ASSESSMENT RECORD SUGGEST THAT VIDED LETTER DATED 20.12.2 0 06 (PRIOR TO FINALIZATION OF THE ASSESSMENT ORDER), THE ASSESSEE HAD FILED CONFIRMATIONS OF UNSECURED LOAN WITH PAN NOS . AND THE CONFIRMATIONS WERE INCORPORATED THE ADDRESS OF THE CREDITORS. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE GIVEN NAMES AND ADDRESSES OF THE ALLEGED CREDITORS, APART FROM PAN. THESE WERE BEFORE THE ASSESSING ITA NO. 4000/ DEL/ 2009 7 OFFICER. WE FIND THAT LD. CIT(A) WHILE DEALING THE SAID ISSUE HAS REFERRED THE HON BLE APEX COU RT DECISION ON THE SIMILAR SITUATION IN THE CASE OF CIT VS. ORISSA CORPORATION (PVT.) LTD. [1986] 159 ITR 78 (SC) VIDE PARA 13 HAS HELD AS UNDER: - 13 . IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME - TAX ASSESSES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUIN G NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT WORTHY OR WERE SUCH WHO COULD ADVANCE THE AL LEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO - CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LA Y ON HON'BLE ITAT, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES.' ITA NO. 4000/ DEL/ 2009 8 8.1 WE FIN D THAT LD. CIT(A) HAS OBSERVED THAT IN THE PRESENT CASE ALSO, AFTER HAVING GIVEN THE NAMES AND ADDRESSES, APART FROM THE PAN AND SOME CASES EVEN COPIES OF RETURN OF INCOME OF THE CREDITS, IT IS HELD THAT THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED ON HIM . WE FIND THAT LD. CIT(A) HAS RIGHTLY FURTHER OBSERVED THAT ONCE THE SAID DETAILS WERE AVAILABLE BEFORE THE AO, HE COULD HAVE MADE ENQUIRIES, SUCH AS ISSUANCE OF NOTICES UNDER SECTION 131 OR 133(6) TO OBTAIN THE BANK ACCOUNTS OF THE SAID CREDITS. WE FI ND THAT LD. CIT(A) BY FOLLOWING THE AFORESAID JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF CIT VS. ORISSA CORPORATION (SUPRA), HAS HELD THAT THE ASSESSE DESERVES TO SUCCEED. IN VIEW OF THE ABOVE, WE FIND THAT LD. CIT(A) HAS RIGHTLY FOLLOWED THE ORDE R OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION (SUPRA) AND DELETED THE ADDITION OF RS. 28,71,564/ - , WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE SAME IS UPHELD. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 28 / 11 /20 1 4 . SD/ - SD/ - [ G.D. AGRAWAL ] [ H.S. SIDHU ] VICE PRESIDENT JUDICIAL MEMBER DATE 28 / 11 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 4000/ DEL/ 2009 9