Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 8649 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-07-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2014-2015
Appeal Filed On
04-07-2018
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI , ! ,'# '$ BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI N.K.PRADHAN, ACCOUNTANT MEMBER . 4369 / /201 8 (. . 2014-15 ) ITA NO.4369/MUM/2018 (A.Y.2014-15) SMT. ANJANA SANDEEP RATHI, A-53, SHRAVAN BUILDING, TARANGAM COMPLEX, SAMATA NAGAR, THANE (W). PAN: AAPPR5975C ...... , / APPELLANT VS. THE ACIT CIRCLE 1, B-WING, 6 TH FLOOR, ASHAR IT PARK, ROAD NO.16-Z, WAGLE INDL. ESTATE, THANE 400 604. ..... !-/ RESPONDENT ,./ APPELLANT BY : SHRI DEVENDRA JAIN !-./ RESPONDENT BY : /- / DATE OF HEARING : 01/07/2020 012 /- / DATE OF PRONOUNCEMENT : 20/07/2020 '/ ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) -3 NASIK (IN S HORT THE CIT (A)) DATED 20/04/2018 FOR THE ASSESSMENT YEAR 2014-15. 2 ITA NO.4369/MUM/2018 (A.Y.2014-15) 2. THE ASSESSEE IN APPEAL HAS RAISED FOLLOWING GROU NDS:- (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF CO MPLETING THE ASSESSMENT UNDER SECTION 143(3) AND MAKING ADDITION OF RS.14,99,917 /- AND DISALLOWING THE LTCG CLAIM OF RS.14,99,917/- UNDER SECTION 10(38) MERELY ON TH E BASIS OF ALLEGED STATEMENTS OF THIRD PARTIES, WITHOUT PROVIDING THE COPIES OF SUCH STATEMENTS AND WITHOUT PROVIDING THE OPPORTUNITY TO CROSS EXAMINE SUCH PARTIES, THUS , VIOLATING THE PRINCIPLES OF NATURAL JUSTICE AS UPHELD BY HONBLE SUPREME COURT IN THE C ASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE (CIVIL APPEAL NO .4228 OF 2006) AND KISHANCHAND CHELLARAM VS. CIT, AIR 1980 SC 2117. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF H OLDING THAT THE TRANSACTION OF THE SALE OF SHARE OF M/S. SUNRISE ASIAN LTD. IS BOGUS A ND SHAM AND MAKING ADDITION OF RS.14,99,917/-. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF NO T GRANTING THE EXEMPTION OF LONG TERM CAPITAL GAIN UNDER SECTION 10(38) OF THE ACT O N SALE OF LISTED EQUITY SHARES SOLD THROUGH RECOGNIZED STOCK EXCHANGE, WHICH HAS DULY B EEN SUBJECTED TO SECURITY TRANSACTION TAX (S.T.T) ON SURMISES, CONJECTURE AND SUSPICION. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF TR EATING THE TRANSACTION OF SALE OF SHARES OF M/S. SUNSHINE ASIAN LTD. AS INCOME FROM U NDISCLOSED SOURCES AND MAKING ADDITION UNDER SECTION 68 OF THE ACT FOR THE AMOUNT CREDITED IN BANK ACCOUNT. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 3. SHRI DEVENDRA JAIN APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED THAT THE ASSESSE/APPELLANT IS TRADER IN SHARES. DURING T HE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE SOLD SHA RES OF M/S. SUNRISE ASIAN LIMITED FOR A TOTAL CONSIDERATION OF RS.14,99,917/- . THE AFORESAID AMOUNT WAS DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESS EE. THE LONG TERM CAPITAL GAIN ON SALE OF SHARES WAS CLAIMED AS EXEMPT U/S 10 (38) OF THE ACT. THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT PROCEEDING S HELD THE AFORESAID AMOUNT AS UNEXPLAINED CREDIT AND MADE ADDITION UNDE R SECTION 68 READ WITH SECTION 115BBE OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT). THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSE POINTED TH AT THE ASSESSEE HAD 3 ITA NO.4369/MUM/2018 (A.Y.2014-15) FURNISHED VARIOUS DOCUMENTS TO SUBSTANTIATE THAT TH E AMOUNT CREDITED TO THE BANK WAS SALE PROCEEDS OF SHARES OF M/S. SUNRISE A SIAN LTD. THE ASSESSING OFFICER REJECTED ALL THE SUBMISSIONS OF THE ASSESSE E. IN FIRST APPELLATE PROCEEDINGS, THE CIT (A) ALSO BRUSHED ASIDE THE EVI DENCES AND CONTENTIONS OF THE ASSESSEE AND UPHELD THE FINDINGS OF ASSESSING O FFICER. 3.1. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSES SEE CONTENDED THAT FATHER IN-LAW OF THE ASSESSEE SHRI NARAYAN R. RATHI HAD A LSO SOLD SHARES OF M/S. SUNRISE ASIAN LTD. DURING THE PERIOD RELEVANT TO TH E ASSESSMENT YEAR 2014-15. THE BENEFIT OF EXEMPTION UNDER SECTION 10(38) OF TH E ACT WAS DENIED TO HIM FOR SIMILAR REASONS AND ADDITION UNDER SECTION 68 W AS MADE HOLDING SALE OF SHARES AS BOGUS AND SHAM TRANSACTION. AFTER REMAINI NG UNSUCCESSFUL BEFORE THE FIRST APPELLATE AUTHORITY, HE CARRIED THE ISSUE IN APPEAL BEFORE THE TRIBUNAL IN ITA NO.4811/MUM/2018 TITLED NARAYAN RAMACHANDRA RAT HI VS. ITO. THE TRIBUNAL VIDE ORDER DATED 08/08/2019 REVERSED THE F INDINGS OF CIT (A) AND ALLOWED THE APPEAL. THE LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE POINTED THAT THE FACTS IN CASE OF THE ASSESSEE ARE IDENTICA L. DRAWING PARITY BETWEEN BOTH THE CASES, THE LD. AUTHORIZED REPRESENTATIVE O F THE ASSESSEE SUBMITTED THAT:- (A) THE TRANSACTIONS OF SALE OF SHARES ARE IN SAME ASSE SSMENT YEAR; (B) THE ISSUE INVOLVED IN BOTH THE APPEALS IS DENIAL O F EXEMPTION UNDER SECTION 10(38) AND ADDITION MADE UNDER SECTION 68 O F THE ACT; (C) THE SCRIPTS TRANSACTED IN BOTH THE CASES IS SAME I. E. M/S. SUNRISE ASIAN LTD.; (D) THE MODUS OPERANDI OF DEALING IN SCRIPTS AND THE EV IDENCES FURNISHED WITH RESPECT TO ACQUISITION AND SALE OF SHARES ARE SIMILAR; 4 ITA NO.4369/MUM/2018 (A.Y.2014-15) (E) IN FACT THE SHARES IN QUESTION WERE JOINTLY PURCHAS ED BY THE ASSESSE AND NARAYAN R. RATHI; AND (F) THE GROUNDS OF APPEAL RAISED IN BOTH THE APPEALS A RE IDENTICAL. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSI NG THE APPEAL OF ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY RIVAL SIDE S AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN AP PEAL HAS ASSAILED THE FINDINGS OF CIT (A) IN DISALLOWING BENEFIT OF SECTI ON 10(38) OF THE ACT ON LONG TERM CAPITAL GAIN ARISING FROM SALE OF SHARES. THE ASSESSEE DURING THE RELEVANT PERIOD HAD SOLD SHARES OF M/S. SUNRISE ASIAN LTD. F OR A CONSIDERATION OF RS.14,99,917/-. THE AUTHORITIES BELOW HELD THE SALE TRANSACTION IN AFOREMENTIONED SCRIPTS AS BOGUS AND THUS, MADE ADDI TION UNDER SECTION 68 OF THE ACT. WE FIND THAT SIMILAR DISALLOWANCE WAS MAD E IN THE CASE OF NARAYAN R. RATHI (FATHER-IN-LAW OF THE PRESENT ASSESSE/APPELLA NT) FOR THE ASSESSMENT YEAR 2014-15. NARAYAN R. RATHI HAD ALSO SOLD THE SHARES OF SAME COMPANY I.E. M/S. SUNRISE ASIAN LTD. THE ISSUE TRAVELLED TO THE TRIBU NAL. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 4811/MUM/2018 (SUPRA) DELET ED THE ADDITION. THE TRIBUNAL WHILE ALLOWING THE APPEAL OF NARAYAN R. RA THI HELD THAT THE PRINCIPLES OF NATURAL JUSTICE WERE VIOLATED, THE BENEFIT OF CR OSS EXAMINATION WAS NOT AFFORDED TO THE ASSESSEE, HENCE, THE ADDITION IS UN SUSTAINABLE. THE RELEVANT EXTRACT OF THE FINDING OF TRIBUNAL ARE REPRODUCED H EREIN BELOW:- 11. THE AUTHORITIES BELOW HAVE NOT DOUBTED THE DOC UMENTARY EVIDENCE PRODUCED BY THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSA CTION OF SALE AND PURCHASE OF THE SHARES IN QUESTION. FURTHER, THE AUTHORITIES BELOW HAVE NOT POINTED OUT ANY EVIDENCE ON RECORD TO HOLD THAT THE ASSESSEE HAS OBTAINED BO GUS ENTRIES IN CONNIVANCE WITH 5 ITA NO.4369/MUM/2018 (A.Y.2014-15) ENTRY OPERATORS AND BROKERS ETC., IN ORDER TO CLAIM BOGUS LTCG. AS POINTED OUT BY THE LD. COUNSEL, THE ASSESSEE WAS NOT GIVEN AN OPPORTUN ITY TO CROSS EXAMINE THE WITNESSES WHOSE STATEMENTS WERE RELIED UPON AND ON THE BASIS OF THEIR STATEMENTS IT WAS CONCLUDED THAT THE TRANSACTION IN QUESTION WAS A PART OF PENNY STOCK SCAM. SO, IN VIEW OF THE CASES DISCUSSED IN THE FOREGOING PARAS, PARTICULARLY THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M/S ANDAMA N TIMBER INDUSTRIES (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ASSESSMENT ORDER PASSED BY THE AO IN VIOLATION OF T HE PRINCIPLES OF NATURAL JUSTICE. HENCE, THE IMPUGNED ORDER PASSED BY THE LD CIT (A) SUFFERS FROM LEGAL INFIRMITY. WE, THEREFORE, ALLOW THE SOLE GROUND OF APPEAL OF T HE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). ACCORDING LY, WE DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. 6. THE LD. DEPARTMENTAL REPRESENTATIVE HAS FAILED T O CONTROVERT THE FINDINGS OF TRIBUNAL IN THE CASE OF SHRI NARAYAN R. RATHI WHOSE CASE IS ON THE SAME PEDESTAL WITH IDENTICAL SET OF FACTS. IN FACT A PERUSAL OF THE ASSESSMENT ORDER IN THE CASE OF ASSESSE REVEAL THAT THE ASSESS ING OFFICER IN PARA 8.3 HAS OBSERVED THAT 3000 SHARES WERE JOINTLY HELD BY THE ASSESSE AND NARAYAN RAMACHANDRA RATHI. THE FACTS OF PRESENT CASE ARE SI MILAR TO THE FACTS OF CASE IN THE CASE OF NARAYAN R. RATHI DECIDED BY THE CO-ORDI NATE BENCH. NO DISTINCTION IN FACTS HAS BEEN BROUGHT TO OUR KNOWLEDGE BY THE D EPARTMENT. THUS, FOR THE PARITY OF REASONS, ADDITION MADE UNDER SECTION 68 O F THE ACT DESERVES TO BE DELETED. FURTHER, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE BENEFIT OF SECTION 10(38) OF THE ACT TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON MONDAY THE 20 TH DAY OF JULY, 2020. SD/- SD/- (N.K.PRADHAN) (VIKAS AWASTHY) '# / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 4 / DATED: 20/07/2020 VM , SR. PS (O/S) 6 ITA NO.4369/MUM/2018 (A.Y.2014-15) COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT , 2. !- / THE RESPONDENT. 3. 5- ( )/ THE CIT(A)- 4. 5- CIT 5. 67!- , . . . , / DR, ITAT, MUMBAI 6. 789:; / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI
