Smt. Usha Maheshwari Prop. Naval Marbles, UDAIPUR V. DCIT, UDAIPUR

ITA 430/JODH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1569 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SEHGAL
• Assessee Lawyers: DEVENDRA MEHTA
• Keywords: Search and seizure; Share purchase agreement
• Section: 143(3); 153A; 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 430/JU/2011 (A.Y. 2004-05) SMT. USHA MAHESHWARI VS. THE D.C.I.T P/O NAVAL MARBLES CENTRAL CIRCLE, CHARBHUJA ROAD, AMET UDAIPUR DISGT. RAJSAMAND PAN NO. ADYPM 5411E ITA NO. 431/JU/2011 (A.Y. 2004-05) SHRI MILAN MAHESHWARI VS. THE D.C.I.T S/O SHRI CHANDRESH KUMAR MAHESHWARI CENTRAL CIRCL E, CHARBHUJA ROAD, AMET UDAIPUR DISGT. RAJSAMAND PAN NO. ACGPM 7083 J ITA NO. 429/JU/2011 (A.Y. 2004-05) SHRI MOHIT MAHESHWARI VS. THE D.C.I.T P/O M/S MARBLE HOUSE CENTRAL CIRCLE, CHARBHUJA ROAD, AMET UDAIPUR DISGT. RAJSAMAND PAN NO. ADYPM 5410 F ASSESSEE BY : SHRI DEVENDRA MEHTA DEPARTMENT BY : SHRI DEEPAK SEHGAL DATE OF HEARING : 28/01/2013 DATE OF PRONOUNCEMENT : 21/02/2013 2 ORDER PER BENCH :- ALL THE ABOVE-CAPTIONED APPEALS PERTAIN TO SAME GR OUP AND A.Y. 2004-05, THEREFORE, FOR THE SAKE OF CONVENIENCE AND BREVITY, WE PROCEED TO DECIDE THEM BY THIS COMMON ORDER. ITA NO. 430/JU/2011 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES - BOTH RESIDENTIAL AND BUSINESS BELONGING TO THE ASSESSEES GROUP, WHO ARE ENGAGED IN THE BUSINESS OF MINING OF MARBLE BLOCKS AND LUFFERS BES IDES TRADING IN MARBLE BLOCKS AND TILES. MINES ARE SITUATED IN THE REVENUE ESTATE OF VILLAGE AGARIA, DISTRICT RAJSAMAND. PURSUANT TO NOT ICE ISSUED U/S 153A SHE FILED HER RETURN OF INCOME ON 25.02.2009 DECLAR ING A TOTAL INCOME OF RS.21,43,093/- (WHICH INCLUDES LONG-TERM CAPITAL GAINS OF RS.18,45,505/-) AS AGAINST THE TOTAL INCOME OF RS. 21,47,980/- (WHICH ALSO INCLUDES LONG-TERM CAPITAL GAINS OF RS. 18,45,505/-) DECLARED IN HER ORIGINAL RETURN OF INCOME FILED ON 28.10.2004. ASSESSMENT U/S 153A R.W.S. 143(3) WAS COMPLETED ON 16.12.2010 AT A TOTAL INCOME OF RS. 40,07,050/-. 3 SUBSEQUENTLY, ORDER U/S 154 WAS PASSED BY THE A.O. WHICH RESULTED INTO TOTAL ASSESSED INCOME OF RS. 21,61,543/- BECAU SE INCLUSION OF THE LTCG IN THE TOTAL ASSESSED INCOME AS UNDISCLOSED IN COME DID NOT AFFECT THE TOTAL INCOME OF THE ASSESSEE BUT ONLY INCREASED THE TAX LIABILITY. THE A.O. MADE ADDITION OF RS. 18,45,505/- ON ACCOUN T OF LTCG ON SALE OF SHARES AND BROUGHT TO TAX THIS AMOUNT AS VERY UN DISCLOSED SOURCES AND A SUM OF RS. 18,450/- AS UNDISCLOSED COMMISSION PAID IN CASH. BEING AGGRIEVED, THE ASSESSEE WENT BEFORE THE LD. C IT(A) WHO HAS NOT OBLIGED THE ASSESSEE AND HAS DISMISSED THE APPEAL. NOW THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE SAME. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. FIRST ISSUE RAISED VIDE GROUND NOS 1 AND 2 WAS STATED TO BE COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISION OF THE MUMBAI BENCH OF THE ITAT AND ALSO OTHER DECISIO NS WHICH ARE ENLISTED IN THE SYNOPSIS FILED BY THE LD. A.R. DURI NG THE COURSE OF HEARING. THE REVENUE COULD NOT SUCCESSFULLY CONTROV ERT THE SUBMISSIONS OF THE LD. A.R. SHRI DEVENDRA MEHTA. WE HAVE FOUND THAT THIS GROUND CHALLENGES THE LEGALITY OF THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT COMPLETED U/S 153A R.W.S 143(3) OF THE A CT IN THE CASE OF COMPLETED ASSESSMENT DE HORS ANY INCRIMINATING MATE RIAL HAVING BEEN 4 FOUND DURING THE COURSE OF SEARCH. THIS ISSUE STAN DS COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS WHICH LA Y DOWN THAT NO ADDITION CAN BE MADE BY AN A.O. IN CASE OF ASSESSME NT FOR A PARTICULAR A.Y. AS ALREADY BEEN COMPLETED BEFORE THE DATE OF S EARCH AND DURING SEARCH NO INCRIMINATING EVIDENCE IS FOUND QUA THAT ADDITION: 1. ANIL P. KHIMANI VS. D.C.I.T. [I.T.A.NO.2855-2860/MU M/2008 (MUM)] 2. L.M.J. INTERNATIONAL LTD. VS. D.C.I.T. [(2008) 22 S OT 315 (CAL)] 3. MEGHMANI ORGANICS LTD. VS. D.C.I.T. [(2010) (36 DTR 187 (AND)] 4. SUNCITY ALLOYS PVT. LTD. VS. A.C.I.T. [(2009) 124 T TJ 674 (JODH)] 5. GURUPRERNA ENTERPRISES VS. A.C.I.T. [(2011) 57 DTR 465 (MUM)] 6. ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT [2012] 137 ITD 26 (MUM.) (SB ) THUS THE ISSUES IN GROUND NOS. 1 AND 2 ARE DECIDED IN FAVOUR OF THE ASSESSEE. 4. WE HAVE NOTICED THAT DURING IN THE ASSESSEE'S CA SE, THE STATEMENT OF SHRI CHANDRESH KUMAR MAHESHWARI WAS RECORDED U/S . 132(4) IN RESPECT OF BROKER NOTES, CONTRACT NOTES ETC FOUND D URING SEARCH AND SEIZURE OPERATION AND HE CATEGORICALLY STATED THAT THE TRANSACTIONS CONTAINED IN THESE DOCUMENTS WERE DULY SHOWN IN THE RETURN OF INCOME FILED BY VARIOUS FAMILY MEMBERS AND THE LONG TERM CAPITAL GAINS ON SALE OF SHARES WAS OFFERED FOR TAXATION. THE ASSESS MENTS FOR THOSE YEARS WERE COMPLETED. IT IS NOT THE ASSE SSING OFFICER'S CASE 5 THAT THESE TRANSACTIONS WERE NOT SHOWN IN THE RETU RN OF INCOME OF THE RESPECTIVE FAMILY MEMBERS. UNDER THESE FACTS AND CI RCUMSTANCES NO ADDITION IS WARRANTED IN THE ASSESSEES CASE. 5. G ROUND NO. 3 PERTAINS TO LONG TERM CAPITAL GAINS ON SALE OF SHARES OF G. TECH INFO TRAINING LTD. AMOUNTING TO R S.18,45,505/- BEING BROUGHT TO TAX BY THE ASSESSING OFFICER AS IN COME FROM UNDISCLOSED SOURCES. 6. IT WAS ARGUED BY THE LD. A.R. THAT THE ASSESSEE HAD PURCHASED 1,23,000 EQUITY SHARES OF G. TECH INFO TRAINING L TD., MUMBAI, THROUGH STOCK BROKER T. H. VAKIL SHARES AND SECURIT IES PVT. LTD., A MEMBER OF BOMBAY STOCK EXCHANGE HAVING SEBI REGISTRATION NO.INB 011047538 VIDE BROKER NOTE NO.B/006/02 DAT ED 03.04.02 THE ASSESSEE HAD PURCHASED THE SHARES AT A COST OF RS. 1,36,594/. UNDISPUTEDLY, THE A.O. HAS ACCEPTED THIS TRANSACTIO N OF PURCHASE OF SHARES IN THE ASSESSMENT U/S 153A OF THE ACT FOR A.Y. 2003-04. A COPY OF THE ORDER IS ENCLOSED IN THE PAPER BOOK. THE SHARES WERE LISTED IN BOMBAY STOCK EXCHANGE, REGULARLY TRA DED THEREIN AND THE TRANSACTION OF PURCHASE AND SALE OF SHARES WAS EXECUTED AT PREVAILING MARKET RATE. THE IDENTITY OF BROKER W AS BEYOND 6 DOUBT AS HE WAS SEBI REGISTERED BROKER. THESE SHAR ES WERE ACQUIRED IN PHYSICAL FORM AND THE ASSESS EE RECEIVED THE FOLLOWING SHARE CERTIFICATES FROM G-TECH INFO-TRAIN ING LTD., MUMBAI FOR 1,23,000 EQUITY SHARES VIDE LETTER DATED 15.10.2002. HE ALSO INVITED OUR ATTENTION TOWARDS REGISTERED FO LIO NUMBERS AND SHARE CERTIFICATE NUMBERS WITH DISTINCTIVE NUMB ERS WITH REFERENCE TO HIS WRITTEN SYNOPSIS AND PAPER BOOK. THESE FACTS HAVE NOT BEEN CONTROVERTED OR DENIED BY THE REVENUE . THE LD. A.R. FURTHER SUBMITTED THAT PRIOR TO THEIR SALE, THESE SHARES WERE DEMATERIALIZED WITH IDBI BANK LTD. THE DEMATERIALIZ ED SHARES WERE HELD IN ASSESSEE'S DEMAT ACCOUNT WITH IDBI BANK LTD . (ACCOUNT NO.11779473). THE PAYMENT TOWARDS PURCHASE CONSIDER ATION WAS PAID IN CASH OUT OF AVAILABLE CASH BALANCE WITH THE ASSESSEE AND IN NINE INSTALLMENTS SPREAD OVER 18 DAYS FOR CONSIDERA TION OF RS. 1986988/- THROUGH THE STOCK BROKER M/S. VIJAY BHAGW ANDAS & CO. AND ASSESSEE EARNED LONG TERM CAPITAL GAIN OF RS.18,45, 505/-. THE BROKER CONFIRMED THE ENTIRE TRANSACTION OF PURCHASE OF SHA RES AND SALE THEREOF THE ASSESSEE FURNISHED ALL EVIDENCES I.E. B ROKER NOTES, CONTRACT NOTES, RELEVANT EXTRACT OF CASH BOOK AND B ANK BOOK, CAPITAL ACCOUNT, BALANCE SHEET AS ON 31.03.2003 AND 31.03.2004, COPY OF SHARE CERTIFICATE, DEMAT STATEMENT, ETC. WH ICH WERE IN HIS 7 POSSESSION TO ESTABLISH GENUINENESS OF PURCHASE AND SALE OF SHARES. TO FURTHER SUBSTANTIATE HIS GROUND, THE LD. A.R. STATE D THAT THE ASSESSEE AND HIS FATHER WERE SUBJECTED TO EXAMINATION THROUG H RECORDING OF STATEMENT IN THE MONTH OF OCTOBER, 2010 WHEREAS THE TRANSACTION OF PURCHASE OF SHARES TOOK PLACE IN APRIL 2002 AND THE TRANSACTION OF SALE TOOK PLACE ON 16.02.2004. IN OTHER WORDS, THER E WAS A TIME GAP OF ABOUT 8 YEARS IN RECORDING OF STATEMENT AND DATE OF PURCHASE TRANSACTION. IT IS HUMANLY IMPOSSIBLE FOR ANY PERSO N TO REMEMBER THE TRANSACTION WITH EVERY MINUTE DETAIL AFTER A LA PSE OF SUCH A LONG TIME. AFTER EXPLAINING EACH AND EVERY REASON GIVEN BY THE A.O. TO MAKE THIS ADDITION THE LD. A.R. HAS FINALLY RELIED ON THE FOLLOWING DECISIONS TO BRING HOME THE LEGAL POINT THAT NO ADD ITION CAN BE MADE MERELY ON THE BASIS OF ERRONEOUS STATEMENT AFTER BR USHING ASIDE SOME UNCONTROVERTED FACTS: 1. PULLONGODE RUBBER PRODUCE CO. PVT. LTD. VS. STATE O F KERALA 91 ITR 18 (SC) 2. G. MURUGESAN & BROS. VS. CIT (1979) 83 ITR 432 (SC) 3. CIT VS. BHANWARLAL (1997) 225 ITR 870 (RAJ) 4. JAGDEESHCHANDRA GUPTA VS. ACIT (1996) 56 TTJ 337 (C HD) 5. PRANAV CONSTRUCTION CO. VS. ACIT (1997) 61 TTJ 145 (MUM) 7. ON THE OTHER HAND, THE LD. CIT D.R. SHRI DEEPAK SEHGAL HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 8 8. WE HAVE NOTICED THAT THE FACTS STATED BY THE LD. A.R. ARE CORRECT AND ARE NOT DISPUTED BY THE REVENUE. THE I SSUE STANDS COVERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SHR I BHANWARI LAL [SUPRA] AND BY THE HON'BLE SUPREME COURT IN THE CASE OF PU LLONGODE RUBBER PRODUCE CO. PVT. LTD. VS. STATE OF KERALA [SUPRA]. ACCORDINGLY, THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE. THEREFOR E, WE ALLOW THIS APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ITA NO. 431/JU/2011 & ITA NO. 429/JU/2011 10. THE FACTS AND CIRCUMSTANCES AND ARGUMENTS, REAS ONS ETC IN BOTH THE OTHER APPEALS ON THEIR MERITS ARE EXACTLY IDENT ICAL AND THE DECISION TAKEN IN THIS CASE WILL APPLY TO OTHER CASES, MUTATIS MUTANDIS . THEREFORE, WITH SIMILAR REASONING, WE ALLOW BOTH TH E APPEALS. WE ORDER ACCORDINGLY. 9 11. TO SUM UP, IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21 ST FEBRUARY, 2013 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR