DCIT CEN CIR 22, MUMBAI V. NEELAM KAINYA, MUMBAI

ITA 4081/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2186 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 10-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Reopening of assessment; Unexplained cash credit
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI SANDEEP GOSAIN , J M ./ ITA NO . 4081 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 0 6 - 20 07 ) D CI T,CC CIR - 22 , MUMBAI - 400020 VS. SMT. NEELAM KAINYA,701, GAURAV APARTMENT, GOKULDHAM, GOREGAON(E), MUMBAI - 63 ./ ./ PAN/GIR NO. : A A BPK 8366 Q ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO . 169 / MUM/20 1 4 ( / ASSESSMENT YEAR :2006 - 2007 ) SMT. NEELAM KAINYA,701, GAURAV APARTMENT, GOKULDHAM, GOREGAON(E), MUMBAI - 63 VS. DCIT,CC CIR - 22, MUMBAI - 400020 ./ ./ PAN/GIR NO. : A ABPK 8366 Q ( / APPELLANT ) .. ( / RESPONDE NT ) /REVENUE BY : SHRI AARSI PRASAD /ASSESSEE BY : DR. K.SHIVARAM / DATE OF HEARING : 15 / 09 / 2015 / DATE OF PRONOUNCEMENT 09/12 /2015 / O R D E R PER R.C.SHARMA (A .M) : TH E REVENUE HAS FILED APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTION, AGAINST THE ORDER OF CIT(A), FOR THE ASSESSMENT YEAR 2006 - 07 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.147 OF THE ACT. 2. T HE REVENUE IN ITS APPEAL IS AGGRIEVED FOR DELETING ADD ITION OF RS. 82.97 LAKHS U/S.68 OF THE ACT AS UNEXPLAINED CASH CREDIT AND RS.4.14 ITA NO. 4081/13 & CO NO.169/14 2 LAKHS AS UNACCOUNTED COMMISSION EXPENDITURE @5% FOR EARNING THE SAME. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD CLAIME D LONG TERM CAPITAL GAIN OF RS.82,97,657/ - WHICH HAD BEEN CLAIMED AS EXEMPT. THE AO HAS HELD THE SAID GAIN AS UNEXPLAINED CASH CREDIT UNDER S.68 OF THE ACT; ALSO ADDING BACK RS.4,14,893/ - CONSIDERING THE SAME AS EXPENDITURE TOWARDS COMMISSION FOR THE SAID ARRANGEMENT. THERE WAS A CLAIM OF PURCHASE OF 35,000 SHARES OF G.K. C ONSULTANTS LTD. ON 11.06.2003 TROUGH THE BROKER RAJENDRA PRASAD SHAH FOR RS.1,45,450/ - . THE SAME WERE STATED TO HAVE BEEN SOLD IN MAY 2005 FOR RS.84,43,107/ - , THEREBY EARNING PROFIT OF RS . 82,97,657/ - . THE SAID SHARES WERE PURCHASED IN PHYSICAL FORM AND SOLD IN DMAT FORM DURING THE YEAR AND THROUGH STOCK EXCHANGE AND TRANSACTION SUBJECTED TO STT. CONSIDERING THESE FACTS THE AO HELD THAT THE CLAIM OF LONG TERM CAPITAL GAIN CANNOT BE HELD AS GENUINE. 4. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION, HOWEVER, HE HAS CONFIRMED THE REOPENING AFTER HAVING THE FOLLOWING OBSERVATIONS : - . 6. I HAVE CONSIDERED THE FIN DINGS OF THE A.O AND THE SUBMISSIONS OF THE APPELLANT. THE A.O. HAS HELD TH AT THE TRANSACTION RESULTING IN LONG TERM CAPITAL GAIN ARISING FROM SALE OF 35,000 SHARES IS NOT GENUINE. ON THE OTHER HAND, THE APPELLANT HAS PLACED ON RECORD THE FOLLOWING MATERIAL/ DOCUMENTS TO PROVE THE GENUINENESS OF THE TRANSACTION - I) THE SHARES HELD WERE DISCLOSED AS INVESTMENT FOR A.Y. 2004 - 05. II) SUCH TREATMENT OF THE SAID SHARES AS INVESTMENT WAS ACCEPTED BY THE A.O. IN THE A.Y. 2005 - 06. ITA NO. 4081/13 & CO NO.169/14 3 III) COPY OF CONTRACT NOTE ISSUED BY RAJENDRA PRASAD DATED 04.06.2003, 0 - 6.06.2003, 10.6.2003 AND 11. 6.2003 EVIDENCES PURCHASE OF SHARES, WHICH HAS NOT BEEN REJECTED OR DISOWNED BY THE A.O. HENCE THERE IS DOCUMENTARY EVIDENCE AVAILABLE FOR PURCHASE OF SHARES. IV) SHARES WERE PURCHASED IN PHYSICAL FORM AND CREDITED IN DEMAT ACCOUNT AND DEMAT STATEMENT DA TED 30.4.2005 WAS PRODUCED WHEREIN SHARES ARE REFLECTED. V) SALE WAS EFFECTED ON STOCK EXCHANGE PLATFORM AND PAYMENT RECEIVED THROUGH BANKING CHANNELS. VI) CONTRACT NOTES HAVE BEEN PRODUCED EVIDENCING SALE THROUGH BROKER AND SALES REFLECTED IN BANK STA TEMENT OF APPELLANT. 6.1 FROM THE ABOVE IT CAN BE OBSERVED THAT REQUISITE MATERIAL TO EVIDENCE THE TRANSACTION WAS PLACED ON RECORD BY THE APPELLANT. THE SAID EVIDENCE HAS NOT BEEN DISCOUNTED. WHEN APPELLANT HAS SUBMITTED COPIES OF CONTRACT NOTE, SHOWN T HAT MONEY HAS BEEN RECEIVED IN THE BANK ACCOUNT, FROM SALE OF SHARES, THE PURCHASE OF WHICH HAD NOT BEEN DOUBTED IN THE EARLIER YEAR, IT IS NOT POSSIBLE TO ACCEPT THE FINDING OF THE A.O. THAT THE INCOME IS FROM UNDISCLOSED SOURCE. FROM THE RECORDS IT CAN B E SEEN THAT APPELLANT HAD SUBMITTED CONTRACT NOTE, SALES BILL, DEMAT STATEMENT AND STATEMENT OF ACCOUNT TO SUBSTANTIATE THAT SALES HAD BEEN EFFECTED. HENCE I AM UNABLE TO SUSTAIN THE FINDINGS OF THE A.O. SINCE THE DISALLOWANCE OF THE LONG TERM CAPITAL GAIN HAS NOT BEEN UPHELD, THE DISALLOWANCE OF 5% COMMISSION IS DELETED. IT IS HELD THAT THE ADDITION MADE UNDER S. 68 IS NOT IN ORDER. 5. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTION ALLEGI NG CIT(A)S FOR CONFIRMING THE REOPENING. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT AT PARA 6 THE CIT(A) HAS GIVEN DETAILED FINDING WITH REGARD TO THE DOCUMENTARY EVIDENCE PLACED ON RECORD TO SUBSTANTIATE THE CLAIM OF ACTUAL PURCHASE AND SALE OF SHARES. THE SHARES WERE PURCHASED IN PHYSICAL FORM AND CREDITED IN THE DEMAT ACCOUNT. SUBSEQUENTLY ON SALE THE AMOUNT CAME IN THE BANK ACCOUNT OF THE ASSESSEE. THE CIT(A) ALSO OBSERVED THAT PURCHASE OF SHARE IN PREVIOUS YEAR AS DISCLOSED IN THE ITA NO. 4081/13 & CO NO.169/14 4 BALANCE SHE ET WAS ALSO NOT DOUBTED BY THE AO, THEREFORE, IT IS NOT POSSIBLE TO ACCEPT THE FINDING OF AO THAT INCOME FROM SALE IS FROM UNDISCLOSED SOURCE. THE DETAILED FINDING RECORDED BY CIT(A) AT PARA 6 HAS NOT BEEN CONTROVERTED. ACCORDINGLY, WE DO NOT FIND ANY REAS ON TO INTERFERE IN THE FINDINGS OF THE CIT(A). 6. SO FAR AS REOPENING OF ASSESSMENT IS CONCERNED, WE FOUND THAT AFTER COMPLETION OF ASSESSMENT U/S.153A R.W.S.143(3), THE AO GOT INFORMATION THAT ASSESSEE HAD INDULGED IN PURCHASE AND SALE OF PENNY STOCK SHAR ES. THE BROKER CONCERNED HAD ALSO NEITHER ANY TRANSACTION WITH THE ASSESSEE AND THAT SEBI HAS ALSO INITIATED REQUISITE ENQUIRY AGAINST THE VARIOUS BROKERS INVOLVED IN THE TRANSACTION OF THESE SHARES. THUS, ,THE AO WAS HAVING SUFFICIENT MATERIAL ON RECORD T O CONCLUDE THAT THERE IS ESCAPEMENT OF INCOME SO AS TO WARRANT REOPENING OF THE ASSESSMENT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF AO FOR REOPENING ASSESSMENT. ACCORDINGLY, GROUND TAKEN BY THE ASSESSEE ALLEGING FOR THE REOPENING, IS DISM ISSED. 7 . IN THE RESULT, BOTH APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 09/12 / 201 5 . SD/ - SD/ - ( SANDEEP GOSAIN ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 09/12 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. ITA NO. 4081/13 & CO NO.169/14 5 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//