ACIT, New Delhi V. Smt. Shibani Khosla, New Delhi

ITA 4219/DEL/2011

• Counselvise Citation: 421920114 RSA 2011
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 21-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: VIPIN AGGARWAL
• Keywords: Additional evidence
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 4219(DEL)/2011 ASSESSMENT YEAR: 2007-08 ASSTT. COMMISSIONER OF S MT. SHIBANI KHOSLA, INCOME-TAX, CIRCLE 31(1), VS. 167, GOLF LINKS, NEW DELHI. NEW DELHI. PAN: AKWPK6735G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. S. MOHANTY, SR.DR RESPONDENT BY : SHRI VIPIN AGGARWAL, C.A. DATE OF HEA RING : 21.11.2011 DATE OF PRO NOUNCEMENT : 30.11.2011 ORDER PER K.G. BANSAL : AM THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN DECLARING TOTAL INCOME OF RS. 34,45,807/- ON 31. 07.2007. THE RETURN WAS PROCESSED U/S 143(1) ON 03.03.2009. THEREAFTER, ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUING NOTICE U/S 143(2) ON 24.07.2009. THE DISPUTE IN THIS CASE REVOLVES AROUND THE GENUINENESS OF CO MPUTATION OF SHORT-TERM CAPITAL GAIN (STCG) DECLARED BY THE ASSESSEE AT RS. 27,86,283/-. ITA NO. 4219(DEL)/2011 2 1.1 THE ASSESSEE HAD SHOWN PURCHASE OF 10,000 SHARES OF BIHAR TUBES LTD. ON 26.07.2006 @ RS. 3.11 PER SHARE FOR A SUM OF RS. 31,122/-. FURTHER, SHE SHOWED PURCHASES OF 20,000 SHARE S OF THIS COMPANY ON 25.09.2006 @ RS. 3.60 PER SHARE FOR A SUM OF RS. 72,000/-. THUS, THE TOTAL COST OF 30000 SHARES WAS SHOWN AT RS. 1,03 ,122/-. THESE SHARES WERE SHOWN AS SOLD ON THREE DIFFERENT OCCASION S. THE FIRST SALE OF 12319 SHARES WAS SHOWN ON 08.12.2006 @ RS. 100. 30 (NET CONSIDERATION AFTER DEDUCTING BROKERAGE AND STT) FOR RS. 12, 31,449.97. FURTHER, 10000 SHARES WERE SOLD ON 13.12.2006 @ RS. 88/- P ER SHARE FOR NET CONSIDERATION OF RS. 8,77,056.27. THE REMAINING 7 681 SHARES WERE ALSO SOLD ON 18.12.2006 @ RS. 102.00 PER SHARE FOR NET CONSIDERATION OF RS. 7,80,899.11. THUS, TOTAL SALE CONSIDERATION WAS SHOWN AT RS. 28,89,405/-. AFTER DEDUCTING THE COST, STCG WAS SHOWN AT RS . 27,86,283/-. 1.2 IN ORDER TO ASCERTAIN THE GENUINENESS OF PURC HASES, THE ASSESSEE WAS REQUIRED TO FILE THE ACCOUNTS OF THE BROKER, R.K . INVESTMENT FROM WHOM THE SHARES WERE PURCHASED AND OTHER DETAILS IN RESPECT OF R.K. INVESTMENT. THE ASSESSEE DID NOT FURNISH ANY REPLY TO THESE QUESTIONS. THE AO ISSUED SUMMONS TO R.K. INVESTMENT AT A-69, KAML A NAGAR, DELHI-110007 ITA NO. 4219(DEL)/2011 3 ON 10.12.2009. THERE WAS NO REPLY TO THIS NOTIC E. A PENALTY NOTICE WAS ALSO ISSUED TO THIS PERSON ON 21.12.2009. THE NOTI CE WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS LEFT WITHOUT ADDRESS. THEREAFTER, THE WARD INSPECTOR WAS DEPUTED TO VERIFY THE EXIST ENCE OF R.K. INVESTMENT. IT WAS REPORTED THAT NO SUCH PERSON HAS BEEN EX ISTED ON THIS ADDRESS FOR A FAIRLY LONG PERIOD. IN THE MEAN TIME, THE AO RECEIVED AN UNDATED LETTER OSTENSIBLY FROM R.K. INVESTMENT ON A PLAI N PAPER, NOT BEARING ANY TELEPHONE NUMBER AND HAVING SIGNATURE DIFFERENT FR OM THE SIGNATURE ON THE SALE BILL. IT WAS INTIMATED THAT THE SUMMONS WE RE DELIVERED TO THEIR OFFICE ON 10.12.2009 FOR APPEARANCE ON THE SAME DATE, THEREFORE, IT WAS NOT POSSIBLE TO MAKE THE APPEARANCE. THE AO ALSO MADE FURTHER ENQUIRIES ABOUT THE PRICE OF THE SHARES OF BIHAR TUBES LT D. ON VARIOUS DATES. IT WAS FOUND THAT ON THE DATE OF PURCHASE OF 10000 SHARES ON 26.07.2006, THE SHARE WAS UNLISTED. HOWEVER, THE WEBSITE OF BOMBAY STOCK EXCHANGE SHOWED THAT THE SHARE WAS LISTED ON 25.09.2006 AND ON THAT DATE IT WAS TRADED AT DIFFERENT PRICES RANGING FROM RS. 45.00 TO RS. 91.35. LOOKING TO THESE ENQUIRIES, THE AO DID N OT GIVE ANY CREDENCE TO THE LETTER OSTENSIBLY WRITTEN BY R.K. INVESTMENT. IN CONNECTION WITH THE PRICE, IT HAS BEEN MENTIONED THAT ON 25.09.2006 THERE WAS NO REASON FOR ANYONE TO SELL THE SHARE AT RS. 3.60 PER SHARE WHEN THE PRICE ON THE STOCK ITA NO. 4219(DEL)/2011 4 EXCHANGE VARIED BETWEEN RS. 45/- TO RS. 91.35. ACCORDINGLY, IT WAS HELD THAT THE TRANSACTION WAS NOT BONA FIDE. IT WAS ALSO FOUND THAT THE SHARES WERE RECEIVED IN THE D-MAT ACCOUNT OF THE ASSESSEE ON 07.12.2006. THEREAFTER, THESE SHARES WERE SOLD IN THREE INSTALLMENTS ON 08.12.2006, 13.12.2006 AND 18.12.2006. ON THE B ASIS OF THESE FACTS, IT WAS CONCLUDED THAT THE SHARES WERE NOT PURCHASE D ON THE DATE ON WHICH THEY HAVE BEEN SHOWN. THE SHARES WERE PURCHASED IMMEDIATELY PRIOR TO THE SALE. THE PURCHASES OBVIOUSLY WOULD HAVE TAKEN PLACE AT THE PREVAILING MARKET PRICE. HOWEVER, THE AFFAIRS HAVE BEEN SO ARRANGED TO SHOW THE PURCHASE AT RS. 1,03,122/- AGAINST AC TUAL PURCHASE PRICE OF RS. 28,89,405/-. THIS HAS BEEN DONE TO INTRODUCE THE UNACCOUNTED MONEY BY PAYING TAX AT A LESSER RATE OF 10% APPLICABL E IN THE CASE OF STCG. THEREFORE, THE CLAIM OF EARNING STCG OF RS. 27, 86,283/- WAS NEGATED AND THIS AMOUNT WAS BROUGHT TO TAX UNDER THE R ESIDUARY HEAD. THE INCOME WAS COMPUTED AT RS. 34,38,240/-. 2. AGGRIEVED BY THIS ORDER, THE ASSESSEE MOVED AN APPEAL BEFORE THE CIT(APPEALS)-XXVI, NEW DELHI. THE MAIN SUBMISSION S OF THE ASSESSEE WERE THAT SHE PURCHASED 30000 SHARES FOR A S UM OF RS. 1,03,122/- FROM R.K. INVESTMENT AND THE DELIVERY IN PHYSICAL F ORM WAS RECEIVED ON ITA NO. 4219(DEL)/2011 5 25.07.2006 AND 25.09.2006. THE ASSESSEE PAID TWO CHEQUES OF RS. 31,122/- AND RS. 72,000/- FOR THESE PURCHASES. TH E DETAILS OF THE CHEQUES HAVE BEEN FURNISHED WHICH WERE DEBITED IN THE BA NK ACCOUNT OF THE ASSESSEE ON 05.08.2006 AND 26.09.2006. ON RECEIV ING THE SHARES, THE ASSESSEE FORWARDED THEM TO STANDARD CHARTERED BANK ON 08.11.2006 FOR GETTING THEM CREDITED TO THE D-MAT ACCOUNT. T HE SHARES WERE DE- MATERIALIZED ON 07.12.2006. THE TRADE IN THESE SHARES STARTED ON BOMBAY STOCK EXCHANGE SOME WHERE IN SEPTEMBER, 20 06, THEREFORE, THE SHARES WERE SOLD THROUGH PACE STOCK BROKING SER VICES PVT. LTD. FROM 08.12.2006 TO 18.12.2006 FOR A CONSIDERATION OF RS. 28,89,405/-. THIS RESULTED IN STCG OF RS. 27,86,283/-. IT WAS S UBMITTED THAT ALL THE EVIDENCES OF PURCHASE, SALE AND DE-MATERIALIZATI ON OF THE SHARES WERE IGNORED BY THE AO. HE ALSO IGNORED THE CONFIRM ATION LETTER RECEIVED FROM R.K. INVESTMENT AGAINST THE FACTUAL BACKGR OUND THAT SUMMONS WERE SERVED ON IT ON 10.12.2009. THE ASSESSEE WAS RE QUIRED TO PRODUCE THE DETAILS, ACCOUNTS ETC., OF THIRD PARTY R.K. INV ESTMENT, WHO EXPRESSED INABILITY TO PROVIDE THE SAME ON THE GROUND OF CO NFIDENTIALITY. AS SUCH, THE ASSESSEE WAS UNDER NO OBLIGATION TO PROVIDE THE SE DETAILS. THE D-MAT ACCOUNT HELD BY THE ASSESSEE WITH STANDARD CHAR TERED BANK WAS ALSO IGNORED TO WHICH THE REQUEST WAS MADE ON 07.11.20 06 FOR DE-MATERIALIZING ITA NO. 4219(DEL)/2011 6 THE SHARES. THIS SHOWS THAT THE ASSESSEE HAD BE EN HOLDING THE SHARES IN PHYSICAL FORM AS ON THIS DATE. THE ASSESSEE A LSO RECEIVED ANNUAL ACCOUNTS OF BIHAR TUBES LTD. FROM THE REGISTRAR OF COMPANIES, WHICH SHOW THAT SHE WAS HOLDING 30000 SHARES AS ON 30.09.2006. ACCORDINGLY, IT WAS ARGUED THAT THE AO ERRED IN TAXING THE INCOME UNDER THE RESIDUARY HEAD. 2.1 THE ASSESSEE FILED AN APPLICATION UNDER RULE 46A FOR ADMISSION OF (I) ANNUAL ACCOUNTS OF BIHAR TUBES LTD. AS ON 3 0.09.2006, LETTER FROM DELHI STOCK EXCHANGE STATING THAT THE SHARE OF BIHAR TUBES LTD. WAS LAST TRADED ON 18.12.2000 AT A PRICE OF RS. 7/ - PER SHARE, AND EXTRACT FROM ECONOMIC TIMES FURNISHING QUOTATIONS AND VOLUM E OF TRADED SHARES ON DIFFERENT KEY DATES. THESE DOCUMENTS WERE FORW ARDED TO THE AO FOR HIS COMMENTS, WHO OPPOSED THE ADMISSION OF THE ADDIT IONAL EVIDENCE. HOWEVER, THE LD. CIT(APPEALS) ADMITTED THE EVID ENCE FOR THE PURPOSE OF ADJUDICATION OF THE APPEAL. ON MERITS, THE AO ME RELY REPEATED THE CONTENTS OF THE ASSESSMENT ORDER. 2.2 AFTER CONSIDERING VARIOUS SUBMISSIONS, THE LD . CIT(APPEALS) FURNISHED THE SEQUENCE OF THE TRANSACTIONS ON PAG E NOS. 22 AND 23. ON ITA NO. 4219(DEL)/2011 7 THE BASIS OF THE SEQUENCE, IT WAS HELD THAT THERE WAS NO TRADING OF SHARES IN DELHI STOCK EXCHANGE SINCE 18.12.2000, WHEN IT WAS TRADED AT RS. 7/- PER SHARE. THE TRADING IN SHARES ST ARTED AT BOMBAY STOCK EXCHANGE ON 25.09.2006. THE ASSESSEE BECAME BO NA FIDE OWNER OF THE SHARES AT LEAST ON 30.09.2006 AS PER RECORDS OF THE COMPANY. THESE SHARES WERE SOLD ON THREE DIFFERENT DATES IN DE CEMBER, 2006. IN THE LIGHT OF THESE FACTS, HE CAME TO THE CONCLUSION THAT TH ERE WAS NO EVIDENCE TO HOLD THAT THE TRANSACTIONS WERE MANIPULATED OR THAT THE TRANSACTIONS WERE SHOWN ONLY WITH A VIEW TO PAY TAX ON THE UNACC OUNTED INCOME AT A LESSER RATE. 2.3 AGGRIEVED BY THIS ORDER THE REVENUE HAS FILED AN APPEAL BEFORE US. THE REVENUE HAS CHALLENGED ADMISSION OF ADDITI ONAL EVIDENCE UNDER RULE 46A. IT HAS ALSO CHALLENGED THE DELETING OF IN COME FROM THE RESIDUARY HEAD AND DIRECTING THE AO TO TAX IT AS STCG. 3. BEFORE US, THE LD. SENIOR DR REFERRED TO THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) THAT HIS CONCLUSIONS WERE IMAGINARY. FURTHER, SHE REFERRED TO THE ADDIT IONAL EVIDENCE SUBMITTED BY THE ASSESSEE BEFORE THE LD. FIRST APPELLATE AUTHO RITY IN THE FORM OF ANNUAL ITA NO. 4219(DEL)/2011 8 ACCOUNT OF BIHAR TUBES LTD. ON 30.09.2006, LETT ER FROM THE DELHI STOCK EXCHANGE REGARDING THE LAST TRADE ON 18.12.2000 I N THE SHARES AT RS. 7/- PER SHARE AND EXTRACT FROM ECONOMIC TIMES ABOUT QUOTATIONS OF THIS SHARE ON DIFFERENT KEY DATES. IT IS SUBMITTED THAT THE AO HAD OPPOSED THE ADMISSION OF THE ADDITIONAL EVIDENCE. HE HAD REF ERRED TO THE DETAILED ENQUIRIES MADE BY HIM IN THE CASE OF R.K. INVES TMENT AND THE FAILURE OF THE ASSESSEE TO FILE REQUISITE DETAILS IN THE CO URSE OF ASSESSMENT PROCEEDINGS. IT IS HER CASE THAT THE ASSESSE E COULD NOT PRODUCE EVIDENCE FOR BONA FIDES OF PURCHASE TRANSACTIONS. THEREFO RE, EITHER THE ORDER OF THE AO MAY BE RESTORED OR THE MATTER MAY BE REST ORED TO HIS FILE FOR VERIFYING THESE DETAILS. 3.1 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EVIDENCE NARRATED IN THE ORDER OF THE LD. CIT(AP PEALS) SHOWS THAT THESE SHARES WERE NOT TRADED ON DELHI STOCK EXCHANGE FOR ALONG PERIOD AFTER DECEMBER, 2000 WHEN IT WAS LAST TRADED AT RS. 7/- PER SHARE. THE SHARE BECAME ILLIQUID AND, THEREFORE, ITS VALUE WAS BOU ND TO FALL. THE ASSESSEE PURCHASED SHARES FROM R.K. INVESTMENT FOR WHICH C ONSIDERATION WAS PAID BY WAY OF ACCOUNT PAYEE CHEQUES. THE ASSESSE E ALSO RECEIVED THE SHARES IN PHYSICAL FORM. THE SHARES WERE DE-MA TERIALIZED ON ITA NO. 4219(DEL)/2011 9 08.11.2006. THE SHAREHOLDER REGISTER SHOWS TH E ASSESSEE TO BE THE OWNER OF 30000 SHARES ON 30.09.2006 AND HER NAME AP PEARS AT SERIAL NUMBER 23. THUS, IT IS ARGUED THAT THE LD. CIT(APPE ALS) RIGHTLY HELD THAT THE TRANSACTIONS LEAD TO EARNING OF STCG. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE MAIN PLANK OF THE FINDING OF THE AO IS THAT THE ASSESSEE PURCHASED THE SHARES NEAR ABOUT THE DATES OF SA LE, I.E., IN DECEMBER, 2006. THIS PLANK STANDS DEMOLISHED BY WAY OF EN TRIES IN SHAREHOLDERS REGISTER, WHICH SHOWS THAT THE ASSESSEE HELD 3 0000 SHARES ON 30.09.2006. THE OTHER PLANK IS THAT NO BODY WOU LD HAVE SOLD THE SHARES TO THE ASSESSEE ON 25.09.2006 @ RS. 3.60 PER SHARE WHEN IT WAS TRADED ON BSE BETWEEN RS. 45.00 TO RS. 91.35 PER SHARE. TH E ASSESSEE HAS FILED DETAILS OF PURCHASE BUT IN ABSENCE OF RELIABLE PR OOF OF GENUINENESS OF PURCHASE FROM R.K. INVESTMENT, THIS PLANK STANDS. FURTHER, THE D-MAT ACCOUNT HAS BEEN FILED, WHICH SHOWS THAT THE ACCOUNT WAS OPENED ON 01.11.2006 AND THE SHARES WERE CREDITED IN THE ACCOUNT ON 08.11.2006. THE ACCOUNT ALSO SHOWS SALES ON DIFFERENT OCCASI ONS IN DECEMBER THROUGH PACE STOCK BROKING SERVICES PVT. LTD. ACCORDINGLY , THE FINDING OF THE LD. CIT(APPEALS) THAT THE TRANSACTIONS LED TO STCG DOES NOT SUFFER FROM ANY ITA NO. 4219(DEL)/2011 10 INFIRMITY. THUS, IT IS HELD THAT ALTHOUGH THE SHARES WERE PURCHASED AND SOLD, THE PURCHASE CONSIDERATION IS NOT AMENABLE TO VERIFICATION. 4.1 IN SO FAR AS ADMISSION OF ADDITIONAL EVID ENCE IS CONCERNED, IT MAY BE MENTIONED THAT THE ASSESSEE WAS REQUIRED TO FILE VARIOUS DETAILS ABOUT R.K. INVESTMENT, WHICH COULD NOT HAVE BEEN PO SSESSED BY HER. LATER ON, IT WAS REALIZED THAT SOME OTHER DETAILS AR E AVAILABLE IN PUBLIC DOMAIN; EITHER WITH THE REGISTRAR OF COMPANIES OR DELHI STOCK EXCHANGE OR QUOTATIONS IN ECONOMIC TIMES. THESE DETAIL S ARE IN SUPPORT THE CASE OF THE ASSESSEE BUT AS SUCH DO NOT BRING ANY FRESH FACT ON RECORD. THE LD. CIT(APPEALS) GRANTED AN OPPORTUNITY TO THE AO TO REBUT THE EVIDENCE. HOWEVER, HE MERELY OPPOSED THE ADMISSION. WE A RE OF THE VIEW THAT THE LD. CIT(APPEALS) RIGHTLY ADMITTED THE EVIDENCE WHICH COULD OTHERWISE BE GATHERED FROM INFORMATION AVAILABLE IN THE PUB LIC DOMAIN. 4.2 THUS, IT IS HELD THAT THE LD. CIT(APPEALS) RI GHTLY CAME TO THE CONCLUSION THAT THE SURPLUS REALIZED ON SALE OF SHARES IS TAXABLE AS STCG, BUT THE QUANTUM OF THE SURPLUS REQUIRES F URTHER VERIFICATION. ACCORDINGLY, THE AO IS DIRECTED TO DECIDE THE Q UANTUM OF SURPLUS AND ITA NO. 4219(DEL)/2011 11 ANY UNACCOUNTED MONEY SHOWN AS STCG BY UNDERSTA NDING PURCHASE CONSIDERATION AFRESH AFTER HEARING THE ASSESSEE. 5. IN THE RESULT, THE APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE, AS DISCUSSED ABOVE. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. SMT. SHIBANI KHOSLA, NEW DELHI. 2. ACIT, CIRCLE 31(1), NEW DELHI. 3. CIT 4. CIT(A) 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.