VINAMARA SUNIL GOYAL, MUMBAI V. ITO 19(1)(2), MUMBAI

ITA 4124/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0668 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR BATRA
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 SHRI VINAMARA SUNIL GOYAL C/O. SHANKARLAL JAIN & ASSOCIATES 12, ENGINEER BUILDING 265, PRINCESS STREET, MUMBAI 400 002 PAN:-AHNPG4000G VS. ITO 19(1) - 2 MUMBAI (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI S.L. JAIN REVENUE BY : SHRI PAWAN KUMAR BATRA DA TE OF HEARING : 0 6 .05 .2015 DATE OF PRONOUNCEMENT : 06 .05 .2015 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST ORDER DATED 05.04.2013, PASSED BY THE LD.CIT(A)-22, MUMBA I FOR QUANTUM OF ASSESSMENT U/S 143(3) FOR THE A.Y. 2006-07, ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.21,25,470/- AS MADE BY THE LEARNED ASSESSING OFF ICER UNDER THE PROVISIONS OF SECTION 68 OF INCOME TAX ACT, WIT HOUT PROPERLY CONSIDERING THE FACT OF THE CASE AND LAW APPLICABLE THERETO. 2. THE LEARNED CIT(A) AS WELL AS ASSESSING OFFICER ERRED IN NOT CONSIDERING THE FACT THAT APPELLANTS IS NOT MAINTAI NING ANY BOOKS OF ACCOUNT AND HENCE, THE PROVISIONS OF SECTION 68 OF I.T. ACT ARE INAPPLICABLE. ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 2 3. LEARNED CIT(A) FAILED TO APPRECIATE THAT APPELLA NT RECEIVED CONSIDERATION RS.21,25,470/- ON SALE OF SHARES, COS T OF WHICH RS.13,92,700/- IS DULY PAID BY THE APPELLANT THROUG H ITS BANK ACCOUNT AND BALANCE AMOUNT BEING SHORT TERM CAPITAL GAIN AS RETURNED BY THE APPELLANT. 4. LEARNED CIT(A) ERRED IN HOLDING THAT APPELLANT H AS FAILED TO PRODUCE ORIGINAL PURCHASE BILL FOR WHICH THE SHARES WERE ACQUIRED, WITHOUT PROPERLY APPRECIATION THE FACT THAT SUCH BI LLS WERE DULY FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 5. APPELLANT PRAYS THAT ADDITION MADE BY THE LEARNE D ASSESSING OFFICER OF RS.21,25,470/- U/S 68 BE DELETED. 2. AT THE OUTSET, LEARNED COUNSEL SUBMITTED THAT TH E ISSUE RAISED IN GROUNDS OF APPEAL ARE SQUARELY COVERED BY THE DECIS ION OF TRIBUNAL IN THE CASE OF SHRI SUNIL KUMAR GOYAL IN ITA NO. 4125 & 4126/M/2013, ORDER DATED 18.03.2015, WHEREIN THE TRIBUNAL ON EXA CTLY SIMILAR FACTS HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. A CCORDINGLY, THE ASSESSEES APPEAL SHOULD ALSO BE ALLOWED AS A JUDI CIAL PRECEDEBCE. 3. LD. DR ACCEPTED THAT, THE FACTS OF THE PRESENT C ASE ARE SIMILAR TO THAT OF SHRI SUNIL KUMAR GOYAL AS DECIDED BY THE TR IBUNAL. 4. THE BRIEF FACTS ARE THAT ASSESSEE IS AN INDIVIDU AL CARRYING ON THE BUSINESS OF JEWELLERY IN THE PARTNER-SHIP FIRM NAME D AS BALAJI JEWELS AND HAD SHOWN INCOME FROM CAPITAL GAIN AND OTHER SO URCES. DURING THE YEAR, ASSESSEE HAD DECLARED RS.7,28,000/- BY WAY OF SHORT TERM CAPITAL GAINS ON THE SALE OF LISTED SHARES, AHMADNAGAR FOR GINGS, OPTO CIRCUIT AND OSWAL CHEMIC. THE TOTAL CONSIDERATION MADE FO R THE PURCHASES WERE RS.13,92,700/- AND SALE CONSIDERATION WAS RS.2 1,25,417/-. THE DETAILS OF PURCHASE AND SALE OF SHARE WERE ENCLOSED ALONG WITH THE ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 3 RETURN OF INCOME, WHICH HAS BEEN REPRODUCED AT PAGE 1 OF THE ASSESSMENT ORDER. IN RESPONSE TO THE SHOW CAUSE NOT ICE TO FURNISH THE ENTIRE DETAILS OF TRANSACTIONS OF PURCHASE AND SALE OF SHARES, THE ASSESSEE SUBMITTED ALL THE RELEVANT DETAILS IN SUPP ORT OF THE PURCHASES MADE AND ALSO THE SALE TRANSACTION. HOWEVER, THE AS SESSING OFFICER AFTER DETAILED ENQUIRY FROM THE BROKER, NATIONAL STOCK EX CHANGE AND OTHERS NOTED THE FOLLOWING FACTS:- I) SHARES WORTH RS.13,92,700/- HAVE BEEN PURCHASED IN THE MONTH OF OCTOBER, 2005. II) THE PURCHASE CONSIDERATION HAS NOT BEEN PAID BY THE ASSESSEE TILL 10.12.2005. III) ON 13.12.2005 AN AMOUNT OF RS.50,000/- HAS BEE N PAID. IV) THE PATTERN OF PAYMENT OF PURCHASE CONSIDERATIO N SHOWS THAT THE AMOUNTS HAVE BEEN PAID AFTER CONSIDERABLE GAP A ND JUST A FEW DAYS BEFORE THE DATE OF SALE. V) THE SHARES HAVE BEEN TRANSFERRED TO THE DEMAT A/ C OF THE ASSESSEE ON 23.12.2005 ONWARDS. VI) ALL THE SCRIPS HAVE BEEN HELD FOR A PERIOD RANG ING 0 DAY TO MAXIMUM 7 DAYS. BASED ON THE AFORESAID CONCLUSION, WE HELD THAT ENT IRE TRANSACTION OF SHARES IS SHAM AND ADDED BY THE ENTIRE SALE CONSIDE RATION OF RS.21,25,470/- AS UNEXPLAINED CASH CREDIT U/S 68 O F THE ACT. 5. BEFORE THE LD. CIT(A), THE ASSESSEE HAD MADE DET AILS SUBMISSIONS, WHICH HAVE BEEN INCORPORATED BY THE LD. CIT(A) FROM PAGES 2 TO 4 OF THE APPELLATE ORDER. THE LD. CIT(A), CONFIRMED THE SAID ACTION OF THE AO HOLDING THAT THE TRANSACTIONS ARE NOT GENUINE. ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 4 6. AFTER CONSIDERING THE FINDING GIVEN IN THE IMPUG NED ORDERS, MATERIAL PLACED ON RECORD AND THE ORDER OF THE TRIB UNAL, WE FIND THAT EXACTLY ON SIMILAR REASONING AND GROUNDS, ADDITION WAS MADE IN THE CASE OF SHRI SUNIL KUMAR GOYAL AND SHRI SUNIL KUMAR GOYA L (HUF) ON SALE OF SIMILAR SCRIPS. THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AFTER OBSERVING AND HOLDING AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREF ULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND F ROM THE RECORD THAT ASSESSEE HAD ENTERED INTO BROKER-CLIENT AGREEMENT WITH M/S. VISHWAS SECURITIES LTD. (A MEMBER OF NSE) SOMEWHERE IN ABOUT OCTOBER, 2005 AND PAID THE INITIAL MARGIN OF RS.50,000/-. THE BROKER HAD PURCHASED THE SHARES REFERRED IN STA TEMENT OF CAPITAL GAIN AND ISSUED THE CONTRACT NOTES FOR THE SAME. THE BROKER HAD KEPT THE TRANSACTION AND DELIVERY OF THE SHARES IN HIS POOL ACCOUNT. ASSESSEE DID NOT PAY THE AMOUNT AS TH E BROKER HAD NOT DELIVERED IT TO ASSESSEE'S DEMAT ACCOUNT. THE S HARES, PURCHASED IN OCTOBER, 2005 WERE TRANSFERRED TO DEMA T ACCOUNT UPON PAYMENT. THE SHARES HAVE BEEN SUBSEQUENTLY SOL D THROUGH THE SAME BROKER IN THE OPEN MARKET. UPON THE SALE O F SHARES THE DELIVERY IS TO BE MADE TO THE BROKER'S, ACCOUNT AND FROM WHERE THE BROKER SUBSEQUENTLY MAKES DELIVERY TO THE STOCK EXCHANGE. THE LETTER OF THE BROKER CONFIRMS THE ABOVE FACT OF PURCHASE AS WELL AS HOLDING OF THE SHARES IN POOL ACCOUNT. THE BROKER ALSO EXPLAINED THE REASONS FOR TIME GAP IN COMPLETING TH E PURCHASE AND ITS PAYMENTS. FURTHER, THE BROKER HAS CONFIRMED OF NOT CHARGING ANY INTEREST ON FUNDING IT HAD DONE BETWEE N THE DATE OF PURCHASE AND DATE OF RECEIPT OF PAYMENTS. THE LETTE R OF NSE NOWHERE SAYS THAT THE BROKER NEVER PURCHASED THE SA ID SHARES. 8. WITH REGARD TO THE A.O.'S COMMENTS OF DELIVERY O F SHARES TO THE SAME BROKER'S ACCOUNT, IT HAS TO BE SO AS THE I NVESTOR CANNOT MAKE DIRECT DELIVER TO THE EXCHANGE. ASSESSEE HAS T O ROUTE THE DELIVERY OF SHARES THROUGH THE BROKER'S DE MAT ACCO UNT. IN ANY CASE, THE BROKER HAD CONFIRMED THAT THE TRANSACTION WAS IN POOL ACCOUNT AND, OBVIOUSLY, THEREFORE, FIRSTLY, THE DEL IVERY WAS IN THE ACCOUNT OF THE BROKER AND SUBSEQUENTLY IT WAS TRANS FERRED. 9. WE FIND THAT A.O. OVERLOOKED THE FACT THAT THE C REDIT TO THE BANK ACCOUNT OF THE ASSESSEE WAS IN RESPECT OF SHAR ES SOLD AND ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 5 DELIVERED OUT OF DEMAT ACCOUNT. THUS, THERE IS NO Q UESTION OF SAME BEING UNEXPLAINED. SIMILARLY, THE PAYMENT FOR PURCHASE WERE MADE FROM THE ASSESSEE'S BANK ACCOUNT AND THE SAID PAYMENT WAS FOR SHARES PURCHASED AND CREDITED TO TH E ASSESSEE. 10. FROM THE RECORD WE FOUND THAT AS PER THE UNDERS TANDING OF ASSESSEE, PAYMENT FOR THE SHARES WAS TO BE MADE UPO N DELIVERY THEREOF. ASSESSEE EFFECTED THE PAYMENTS ONLY AT THE TIME OF DELIVERY OF SHARES IN HIS DEMAT ACCOUNT. THE BROKER DID PURCHASE THE SHARES BUT TO SAFEGUARD HIS POSITION, DID NOT E NTER INTO TRANSACTION IN THE NAME OF APPELLANT BUT ENTERED IN TO THE TRANSACTION IN POOL ACCOUNT. THE PRECAUTION TAKEN B Y THE BROKER ACCORDS WITH THE COMMERCIAL PRACTICE OF ENTERING IN TO BUSINESS IN A MANNER, WHICH DOES NOT AFFECT HIS INTERESTS AND, IN FACT, SECURES HIS INTERESTS. A.O. HAS RECORDED THE FACT OF PURCHA SES, DELIVERY, PAYMENT, SALE, DELIVERY THEREOF AND REALIZATION OF CONSIDERATION. HE HAS NOT RAISED ANY DOUBTS OR PASSED ANY ADVERSE COMMENTS IN RELATION TO THE FACT OF PURCHASES, DELIVERY, PAYMEN T, SALE, DELIVERY THEREOF AND REALIZATION OF CONSIDERATION. AO HAS NO T DISPUTED THE FACT THAT DELIVERY DID TAKE PLACE INTO AND FROM HIS DEMAT ACCOUNT. AO HAS NOT DISPUTED THE FACT ABOUT PAYMENT MADE FOR PURCHASES AS WELL AS REALIZATION OF SALES. HE HAS NOT DOUBTED THE GENUINENESS THEREOF. EVEN HE HAS NOT RECORDED ANY F INDING TO THE EFFECT THAT THE PAYMENTS AND/OR REALIZATION WERE ON LYMAKE- BELIEVE. THE BROKER DID ENTER INTO TRANSACTIONS, WH ICH WERE VERIFIED BY AO WITH CONCERNED AUTHORITIES. THE BROK ER HAS CONFIRMED THE TRANSACTION. IN THAT, A DOUBT HAS BEE N RAISED BY OBSERVING 'CONTRACT NOTES ISSUED APPEAR TO BE FAKE. ' HOWEVER, HE HAS NOT GIVEN A CATEGORICAL FINDING TO THE EFFECT T HAT THE CONTRACT NOTES ISSUED WERE FAKE EITHER ON THE BASIS OF INDEP ENDENT EVIDENCE OR ON THE BASIS OF THE RECORDS OF THE BROK ER. RELIANCE IN THIS CONNECTION IS PLACED ON THE DECISION OF SUPREM E COURT IN THE CASE OF SREELEKHA BANERJEE & ORS. V. COMMISSIONER O F INCOME TAX, BIHAR AND ORISSA (1963) (49 ITR 112) WHEREIN I T HAS BEEN HELD THAT THE DEPARTMENT CANNOT BY MERELY REJECTING REASONABLY A GOOD EXPLANATION, CONVERT GOOD PROOF INTO NO PROO F. THE INFERENCE ABOUT GENUINENESS OF THE TRANSACTION IS S OLELY BASED ON DISBELIEF, NAMELY, NO BROKER COULD HAVE WAITED FOR THE PAYMENT OR THE TRANSACTION COULD NOT HAVE TAKEN PLACE WITHO UT THE COMPLIANCE WITH THE PROCEDURE. IN THAT, THE COMMERC IAL PRACTICE OF ENTERING INTO TRANSACTION ON HIS OWN ACCOUNT IN TERMS OF , COMMERCIAL UNDERSTANDING WITH THE CUSTOMER IN CERTA IN CIRCUMSTANCES HAS NOT BEEN CONSIDERED. WHILE DRAWIN G THE INFERENCE, A.O. TOTALLY IGNORED THE FACT ABOUT VERI FIABLE PAYMENT ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 6 THOUGH BANK ACCOUNT; VERIFIABLE RECEIPT OF DELIVERY IN DEMAT ACCOUNT; VERIFIABLE DELIVERY FROM DEMAT ACCOUNT; AN D PAYMENT THOUGHT THE BANK ACCOUNT. HOWEVER, WHEN THE VERIFIA BLE AND /OR VERIFIED DELIVERIES AND PAYMENTS ARE VISIBLE ON REC ORD THERE IS NO MERIT IN THE ACTION OF LOWER AUTHORITY FOR TREATING THE SALE PROCEEDS OF SHARES CREDITED IN BANK ACCOUNT AS UNEX PLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT. 7. IT IS PERTINENT TO NOTE THAT IN ANOTHER CASE OF MS. RANI SUNIL GOYAL, IN ITA NO. 4123/M/2013 , THE TRIBUNAL AGAIN ON SIMILAR FACTS HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, AFTER OBSERVIN G AND HOLDING AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE R ELEVANT FINDINGS GIVEN BY THE AO AS WELL AS CIT(A) AND ALSO THE MATERIAL PLACED ON RECORD. THE ASSESSING OFFICER HAS DISBELI EVED THE TRANSACTIONS OF SALE OF SHARES MAINLY ON THE GROUND THAT, PURCHASES HAVE BEEN MADE BY THE ASSESSEE IN THE MON TH OF OCTOBER 2005 AND TILL THAT PERIOD THE ASSESSEE HAS NOT MADE ANY PAYMENT FOR THE PURCHASE OF SHARES. THE PURCHASE AM OUNT IN FACT HAS BEEN PAID AT A MUCH LATER DATE, THAT IS, ONLY F EW DAYS BEFORE THE DATE OF SALE AND ALSO THE SHARES HAVE BEEN TRAN SFERRED TO DEMAT ACCOUNT ONLY AT THE TIME OF SALE. FROM THE PE RUSAL OF ALL THE INQUIRY CONDUCTED BY THE AO, IT CANNOT BE CONCL USIVELY HELD THAT EITHER THE ASSESSEE HAD NOT PURCHASED THE SHAR ES OR ENTIRE SALE TRANSACTION IS SHAM. THE NSE VIDE ITS LETTER D ATED 14.11.2008 HAS CONFIRMED THE TRANSACTION OF SALE OF SHARES AND ALSO THE TRADE LOGS OF THE BROKER, MIS. VISHWAS SECURITIES PVT. LT D. FROM THE PERIOD 1ST APRIL 2005 TO 31ST MARCH 2006. THE CLIEN T CODE HAS ALSO BEEN SHOWN IN THE NAME OF THE ASSESSEE. THIS I NFORMATION GOES TO SHOW THAT AT LEAST SALE OF SHARES HAS TAKEN PLACE. THE ASSESSING OFFICER, FROM SUCH INFORMATION HAS DRAWN A CONCLUSION THAT THE DATA GIVEN IN THE CD DOES NOT REFLECT THE PURCHASE OF TRANSACTION BUT ONLY THE SALE OF TRANSACTIONS. THE BROKER, MIS. VISHWAS SECURITIES PVT. LTD. HAS DIRECTLY PROVIDED TO AO, BROKER CLIENT AGREEMENT AND ALSO THE DETAILS OF SHARES PUR CHASED THROUGH THE BROKER POOL ACCOUNT. HOWEVER, WITH REGA RD TO PURCHASE OF SHARES, BOTH THE AO AND CIT(A) HAVE MAD E AN OBSERVATION THAT ORIGINAL PURCHASE BILLS FOR PURCHA SE OF SHARES HAVE NOT BEEN FURNISHED, WHEREAS BEFORE US, THE ASS ESSEE IN THE PAPER BOOK HAS FURNISHED BILLS FOR PURCHASE OF SHAR ES WHICH HAVE BEEN PLACED IN THE PAPER BOOK FROM PAGES 20 TO 24 A ND SALE BILLS ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 7 FROM PAGES 25 TO 33. THESE DOCUMENTS NEEDS VERIFICA TION FROM THE END OF THE AO. FURTHER THE ENTRIES APPEARING IN THE BANK ACCOUNT ALSO GO TO SHOW THAT THE ASSESSEE HAD MADE THE PAYMENT FOR THE PURCHASE OF SHARES, THROUGH BANKING CHANNEL, THOUGH THE PAYMENT OF THESE PURCHASES HAVE BEEN MAD E FROM THE PERIOD ON 13.12.2005 TO 14.02.2006. ONCE THE PU RCHASE HAVE BEEN MADE THOUGH ACCOUNT PAYEE CHEQUES AND SALES HA VE ALSO BEEN RECEIVED THROUGH CLEARING IN THE BANK ACCOUNT AND ALL THESE TRANSACTIONS HAVE BEEN ROUTED THROUGH DEMAT ACCOUNT THEN IT CANNOT BE CONCLUSIVELY HELD THAT THE ASSESSEE'S EXP LANATION REGARDING SOURCE OF CREDIT IN THE BANK ACCOUNT REMA INS UNEXPLAINED. THE ASSESSEE'S ONUS UJS.68 IS TO PROVE THE NATURE AND SOURCE OF CREDIT APPEARING IN THE BOOKS AND HE HAS TO GIVE EXPLANATION DULY SUPPORTED BY EVIDENCES ABOUT THE N ATURE AND SOURCE. HERE IN THIS CASE, THE ASSESSING OFFICER IS DOUBTING THE SALE AMOUNT CREDITED IN THE ACCOUNTS OF THE ASSESSE E ON THE GROUND THAT PURCHASES CANNOT BE PROVED BY THE ASSES SEE. HOWEVER, FROM THE MATERIAL PLACED ON RECORD, THE AS SESSEE'S EXPLANATION NOT ONLY WITH REGARD TO THE PURCHASES B UT ALSO THE SALES CANNOT BE DISCARDED AS ALL THESE DOCUMENTS PR IMA FACIE GO TO SHOW THAT THE SALE TRANSACTIONS OF SHARES HAVE T AKEN PLACE. SINCE, SIMILAR FACTS ARE PERMEATING THOUGH IN THE P RESENT CASE AND ALSO THE REASONING OF THE AO AND CIT(A) ARE SAME, THEREF ORE, FOLLOWING THE ABOVE DECISIONS, WE DELETE THE ADDITION AS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). ACCORDINGLY, GROUND RA ISED BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF MAY, 2015. SD/- SD/- ( G.S. PANNU ) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.05.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO. 4124/MUM/2013 ASSESSMENT YEAR: 2006-07 8 THE CIT(A) CONCERNED, MUMBAI THE DR F BENCH // TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.