ESSAR PORTS LTD, MUMBAI V. ACIT-6(2)(2), MUMBAI

ITA 4444/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6895 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 15-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAM TIWARI
• Keywords: Question of law

Judgement Text

1 ITA 4444/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.4444/MUM/2015 (ASSESSMENT YEAR: 2010-11) ITO-32(3)(1), MUMBAI VS M/S RAVI FOUNDATION 602, J.T. TOWER, MBAWADI, DEHISAR(E), MUMBAI-68 PAN : AAAFR2515F APPELLANT RESPONDENT APPELLANT BY SHRI RAM TIWARI RESPONDENT BY SHRI TARUN GHIA DATE OF HEARING 28-05-2018 DATE OF PRONOUNCEMENT 20-06-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-44, MUMBAI DATED 04-05-2015 AND IT PERTAINS TO AY 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUN T OF DISALLOWANCE OF LOSS ON SALE OF TDR AMOUNTING TO RS. 2,10,38,2387 - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS TRADED THE TDR WITHIN A VERY SHORT SPAN OF TIME MAJORITY BEING A DAY OR TWO. THE LD. CIT (A) ALSO FAILED TO APPRECIATE THE FACT THAT ASSESSEE FAILED TO GIVE ANY CONCRETE EVIDENCE AND THE CIRCUMSTANCES WHICH COMPELLED IT T O SELL THE TDR AT HUGE LOSS WITHIN A VERY SHORT SPAN OF TIME. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP 2 ITA 4444/MUM/2015 FIRM WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTAT E DEVELOPMENT, FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 28-09-2010 D ECLARING TOTAL INCOME OF RS.1,22,302. THE CASE WAS SELECTED FOR S CRUTINY AND NOTICES U/S 143(2) AND 142(1), ALONGWITH DETAILED QUESTIONN AIRE WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE DETAIL S AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.2,10,38,238 TO WARDS LOSS FROM SALE OF TDR, THEREFORE, CALLED UPON THE ASSESSEE TO FURNISH NECESSARY EVIDENCES AND ALSO EXPLAIN THE TRUE NATURE OF LOSS CLAIMED FROM SALE OF TDR. IN RESPONSE TO NOTICE, THE ASSESSEE, VIDE LET TER DATED 22-01-2013 SUBMITTED THAT IT HAS PURCHASED AND SOLD 4 TDRS ON DIFFERENT DATES AND INCURRED LOSS OF RS.2,10,38,238. IN THIS REGARD, F ILED COPIES OF AGREEMENT FOR PURCHASE AND SALE OF TDRS TO VARIOUS PARTIES. THE ASSESSEE ALSO EXPLAINED THE REASONS FOR DISTRESS SA LE OF TDRS FOR A PRICE LESSER THAN THE PURCHASE PRICE PAID FOR ACQUI RING SUCH TDRS. ACCORDING TO THE ASSESSE, IT HAS SOLD TDRS BASED ON THE MARKET DEMAND AS ON THE DATE OF PURCHASE AND SALE. THE AS SESSEE ALSO FILED COPY OF DRC UTILISATION FORM AND BMC AGREEMENT ON W HICH STAMP DUTY IS DULY PAID ON TRANSFER OF TDRS. THE ASSESSEE ALS O RELIED UPON CERTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONB LE SUPREME COURT IN 3 ITA 4444/MUM/2015 THE CASE OF STATE BANK OF TRAVANCORE VS CIT (1996) 158 ITR 1029. 3. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS O F THE ASSESSEE OBSERVED THAT ALTHOUGH THE ASSESSEE HAS FILED CERTA IN DETAILS TO PROVE PURCHASE AND SALE OF TDRS, FAILED TO FILE APPLICATI ON FILED WITH MUNICIPAL COMMISSIONER ALONGWITH DRC COPY FOR ENDORSEMENT OF THE NEW BUILDERS NAME IN THE CERTIFICATE. THE ASSESSEE ALSO FAILED TO PRODUCE ANY CONCRETE EVIDENCE IN SUPPORT OF HIS CLAIM OF LOSS O N SALE OF TDRS AND THE CIRCUMSTANCES WHICH COMPELLED IT TO SELL THE TD RS AT SUCH LOSS WITHIN A VERY SHORT SPAN OF TIME. THE RELEVANT POR TION OF THE ORDER OF THE AO IS EXTRACTED BELOW:- 8. THE SUBMISSIONS OF THE ASSESSEE ARE CONSIDERED CAREF ULLY, HOWEVER THE SAME ARE NOT ACCEPTED FOR THE FOLLOWING REASONS;- 1. THE JUDICIAL PRONOUNCEMENTS GIVEN BY THE AR OF THE ASSESSEE ARE SQUARELY NOT APPLICABLE IN THIS CASE. THE ISSUE INVOLVED IN THIS CASE IS ONLY RELATED WITH ALLEGED HUGE LOSS CLAIMED ON SALE OF TDR WITHIN A VERY SHORT SPAN OF TIME. 2. THE AR OF THE ASSESSEE FAILED TO PRODUCE THE C OPY OF DRC AS REQUIRED BY THIS OFFICE ORDER SHEET NOTING DATED 16.01.2013. ONLY A COPY OF THE DRC UTILIZATION FORM DATED 14.12 .2009 IN RESPECT OF THE DRC NO. SRA/850/LAND DATED 02.0L2010 WAS FILED. THE COPY OF ACTUAL DRCS HAVE NOT BEEN FILED EVEN AFTER THIS OFFICE SHOW CAUSE NOTICE DATED 13.03.2013. IT IS A PROVEN FACT THAT WHEN THE DRC HOLDER INTENDS TO TRANSFER I T TO ANOTHER INDIVIDUAL/PERSON, HE MUST SUBMIT THE SAID DRC TO T HE MUNICIPAL COMMISSIONER WITH AN APPROPRIATE APPLICAT ION FOR ENDORSEMENT OF THE NEW HOLDER'S NAME ON THE CERTIFI CATE. WITHOUT SUCH ENDORSEMENT, THE TRANSFER WILL BE INVA LID AND THE CERTIFICATE WILL CONTINUE TO BE IN THE NAME OF THE ORIGINAL HOLDER. THUS THE ASSESSEE FAILED TO PRODUCE THE COPY OF DRC SOLD. * 3. THE AR OF THE ASSESSEE FAILED TO PRODUCE THE S AID DRC WHICH WERE SUBMITTED TO THE MUNICIPAL COMMISSIONER WITH AN APPROPRIATE APPLICATION FOR ENDORSEMENT OF THE NEW HOLDER'S NAME ON THE CERTIFICATE. HE ALSO FAILED TO PRODUCE ANY CONCRETE 4 ITA 4444/MUM/2015 EVIDENCE IN SUPPORT OF HIS CLAIM OF LOSS ON SALE O F TDR AND THE CIRCUMSTANCES WHICH COMPELLED HIM TO SELL THE TDR AT SUCH LOSS WITHIN A VERY SHORT SPAN OF TIME 4. THE AR OF THE ASSESSEE HAS QUOTED SOME VAGUE E XPLANATION SUCH AS 'A DAY DELAY ENOUGH TO HAVE GAINS/ LOSSES A S IT IS A MONOPOLISTIC TRADE, CONTROLLED BY 2-3 PLAYERS, WHER E CASH IS A KING, WHICH LEADS TO MASSIVE FLUCTUATIONS IN PRICES .' 5. THE AR OF THE ASSESSEE HAS GIVEN AN ANALOGY OF STOCK MARKET PRICE FLUCTUATION IN SUPPORT OF HIS CLAIM ON TDR WHICH ULTIMATELY RESULTED IN LOSS. HOWEVER, THERE ARE UMP TEEN REASONS FOR STOCK MARKET PRICE FLUCTUATION VIZ., NATURAL CA LAMITY, PROFIT BOOKING BY FLLS, STABILITY OF GOVERNMENT, POLICIES OF GOVERNMENT, PERFORMANCE OF PARTICULAR SECTOR ETC, E TC. HOWEVER THE ASSESSEE IS NOT ABLE TO OFFER ANY CONCRETE REASON FOR FALL IN TDR PRICE WITHIN SHORT SPAN OF TIME. USUALLY TDR IS ESTATE RELATED AND METROPOLITAN CITY LIKE IN MUMBAI SUCH T DR AND ESTATE ARE ALWAYS HEATING UP. HERE, ANALOGY GIVEN B Y THE AR OF THE ASSESSEE DOES NOT HOLD GOOD. HENCE THE SUBMISSI ONS FURNISHED ARE NOT ACCEPTABLE. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ALONG WITH EVIDENCE IN THE FORM OF AGREEMENTS FOR PURCHASE AND SALE OF TDRS WHICH HAS BEEN REPRODUCED BY THE LD. CIT(A) IN HIS ORDER AT PARA 9 ON PAGES 7 TO 13 OF H IS ORDER. THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE BEFORE T HE LD.CIT(A) ARE THAT IT HAD MADE GENUINE BUSINESS OF PURCHASE AND S ALE OF TDRS IN WHICH IT HAS INCURRED LOSSES WHICH IS BECAUSE OF BU SINESS CONDITIONS AND OTHER CIRCUMSTANCES WHICH HAS BEEN EXPLAINED BEFORE THE AO WITH NECESSARY EVIDENCES. THE ASSESSEE FURTHER SUBMITTE D THAT THE AO HAS NOT DOUBTED THE TRANSACTIONS. HOWEVER, HE DOUBTED THE LOSS INCURRED 5 ITA 4444/MUM/2015 FROM SALE OF TDRS ONLY FOR THE REASON THAT THE ASSE SSEE HAS NOT EXPLAINED THE CIRCUMSTANCES WHICH COMPELLED TO SELL THE TDRS WITHIN A SHORT PERIOD OF TIME. BUT FACT REMAINS THAT A PRUD ENT BUSINESSMAN WHILE DEALING WITH HIS BUSINESS KNOWS BETTER THE MARKET C ONDITIONS AND CIRCUMSTANCES WHICH CANNOT BE SPELT OUT TO THE AO, BUT WHAT NEEDS TO BE EXPLAINED IS WHETHER THE TRANSACTION IS GENUINE AND THE ASSESSEE HAS PRODUCED EVIDENCES TO JUSTIFY THE SAID TRANSACTION. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS FILED ALL EVIDENCES INCLUDING AGREEMENTS FOR PURCHASE AND SALE OF TDRS AND ALSO FILED FURTHER EV IDENCE IN THE FORM OF DRC UTILIZATION FORM AND BMC AGREEMENT ON WHICH STA MP DUTY IS DULY PAID. THE ASSESSEE ALSO EXPLAINED THE FACT THAT TH E DOCUMENTS FOR PURCHASE AND SALE HAS BEEN DIRECTLY EXECUTED BY THE AUTHORITIES, THEREFORE, THERE IS NO REASON FOR THE AO TO DOUBT T HE GENUINENESS OF TRANSACTIONS. THE ASSESSEE FURTHER SUBMITTED THAT AS REGARDS THE AOS OBSERVATION WITH REGARD TO THE DRC ENDORSEMENT FORM , THE ASSESSEE HAS SOLD THE TDRS TO A THIRD PERSON AND HENCE DID N OT FIND IT NECESSARY TO GET THE TDR UTILISATION FORM FILLED IN AND SUBMI TTED FOR ENDORSEMENT BY THE MUNICIPAL COMMISSIONER. HOWEVER, THE FACTS REM AIN THAT THE PERSONS, WHO PURCHASED TDRS HAVE BEEN UTILISED SAID TDRS IN THEIR PROJECTS AND ALSO CONFIRMED BY FILING NECESSARY EVI DENCE. THE COMPLETE TRANSACTION HAS BEEN ROUTED THROUGH BANKING CHANNEL . EVEN THE 6 ITA 4444/MUM/2015 ASSESSEE HAS PAID PURCHASE PRICE BY CHEQUES AND REC EIVED SALE CONSIDERATION FOR SALE OF TDRS BY CHEQUES. THE AO HAS NOT DISPUTED THESE FACTS, THEREFORE, SUBMITTED THAT ONLY ON THE BASIS OF SHORT PERIOD OF HOLDING OF TDRS, THE GENUINE LOSS INCURRED IN THE B USINESS CANNOT BE DOUBTED AND DISALLOWED. 5. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE HELD THAT THE AO HAS NOT BEEN ABLE TO COME UP WITH ANY CREDIBLE EVIDENCE TO SUPPORT HIS VIEW THAT THE SAID TRANSACTION MAY BE SHAM AND THE LOSS THAT HAS BEEN BOOKED MAY NOT BE G ENUINE. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAS FILED NECESSARY EVIDENCES OF PURCHASE OF TDRS AND ALSO FILED VARIOU S DOCUMENTS TO PROVE THE SALE OF TDRS TO REPUTED BUILDERS LIKE HDI L, KANDOR CORPORATION AND RAJKUMAR APARTMENTS. ALL THESE PAR TIES ARE REPUTED BUILDERS, WHO HAVE PURCHASED TDRS FROM THE ASSESSEE AND MADE PAYMENT THROUGH BANKING CHANNELS. THE DRC FORMS IN ALL THE FOUR CASES HAVE THE NAME OF THE PARTY UTILISING THE TDRS . THE AO DISALLOWED LOSS INCURRED FROM SALE OF TDRS ONLY ON THE INFEREN CE THAT NO PERSON OF PRUDENCE WOULD INCUR LOSS OF SUCH HUGE AMOUNT ON TH E SAME DAY OR WITHIN ONE OR TWO DAYS IS NOT SUPPORTED BY ANY EVID ENCE. THE RELEVANT PORTION OF THE ORDER OF THE CIT(A) IS EXTRACTED BEL OW:- 5. DECISION 7 ITA 4444/MUM/2015 ALL THE THREE GROUNDS OF THE APPELLANT PERTAIN TO D ISALLOWANCE OF LOSS OF TDR OF RS. 2,10,38 / 23'8/-. I AM ADJUDICATING ALL THREE GROUNDS TOGETHE R. I HAVE GONE THROUGH THE FACTS OF THE CASE AND I FIN D THAT THE AO HAS MADE DISALLOWANCE ON ACCOUNT OF LOSS FROM TDR AMOUNTING TO RS. 2,10,38,238/-. THE APPELLANT HAS ENTERED INTO FOUR TRANSACTIONS OF PURCHASE AND SUBSEQUENT SALE OF TDR. ALL THE TDR ARE PURCHASED FROM HOUSING DEVELOPMENT AND INFRASTRUCTURE LTD. IT IS SEEN THAT THREE SALE TRANSACTIONS HAVE BEEN DONE EITHERON SAME DAY OR WITHIN 2 DAYS O F RESPECTIVE PURCHASE AND THE APPELLANT HAS INCURRED A LOSS OF 1 5 -VIS-A-VIS SALE PRICE. FOURTH SALE TRANSACTION IS-DONE WITHIN 27 DAYS OF A ND THE APPELLANT HAS INCURRED A LOSS OF 82% VIS-A-VIS SALE PRICE. FACTS ARE THAT THE APPELLANT PURCHASED TDR FROM HDI L IN ALL THE 4 CASES AND ALL 4 HAVE BEEN SOLD TO DIFFERENT PERSONS. THE DRC FORMS IN ALL THE 4 CASES HAVE THE NAME OF THE PERSON UTILIZING THE TDR AS THE NEW BUYER. THIS FACT IS NOT DISPUTED BY THE AO. AGAIN THE EVID ENCE OF THE PAYMENT OF STAMP DUTY IN ALL 4 CASES IS BY THE BUYERS OF THE T DR. IN LIGHT OF THESE FACTS IN MY CONSIDEREDOPINION MERELY DISALLOWING THE CLA IM OF LOSS ON THE INFERENCE THAT NO PERSON OF PRUDENCE WOULD INCUR LO SS OF SUCH HUGE AMOUNT/PERCENTAGE ON THE SAME DAY, 1/2 DAYS OR WITH I FEW DAYS (LESS THAN A MONTH) .WOULD NOT BE SUPPORTED BY EVIDENCE. IT IS NOT TH 'CASE OF THE AO THAT THERE IS ANYTHING TO SUGGEST THAT THE SALE OF TDR TO TH DIFFERENT PARTIES HAS NOT ACTUALLY HAPPENED. NEITHER IT IS THE CASE T HAT THE SUBSEQUENT.USAGE IS NOT BY THE PERSONS WHO ACTUALLY ARE SHOWN TO HAVE.BOUGHT THE TDR. I AGREE WITH THE SUBMISSIONS O F THE APPELLANT THAT A TAX PAYER CAN BE TAXED ONLY ON THE BASIS OF WHAT IS REAL INCOME AND NOT NOTIONAL INCOME (IN THIS- CASE BEING LOSS). IN THE PRESENT CASE THE AO HAS NOT BEEN ABLE TO COME UP WITH ANY CREDIBLE EVID ENCE TO SUPPORT HIS VIEW THAT THE SAID TRANSACTION MAY BE SHAM AND THE LOSS THAT HAS BEEN BOOKED MAY NOT BE GENUINE. ACCORDINGLY, THE ADDITIO N MADE BY THE AO IS DIRECTED TO BE DELETED. THE GROUNDS OF APPEAL AR E HEREBY ALLOWED. 6. THE LD.DR SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN DELETING ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF LOSS ON SALE OF TDRS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS TRADED THE TDRS WITHIN A VERY SHORT SPAN OF TIME, MAJORITY OF THE S AME BEING, A DAY OR TWO AND FAILED TO EXPLAIN BEFORE THE AO THE REASONS WHI CH COMPELLED HIM TO SELL THE TDRS FOR A PRICE WHICH IS LESS THAN THE PU RCHASE PRICE. THE AO HAS BROUGHT OUT CLEAR FACTS IN HIS ORDER TO DISALLO W LOSS BUT THE CIT(A) 8 ITA 4444/MUM/2015 HAS NEGATED ALL OBSERVATIONS OF THE AO WITHOUT ANY REASONS AND HENCE, THE ORDER OF THE AO SHOULD BE UPHELD. 7. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, S TRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSE SSEE HAS FILED VARIOUS DETAILS INCLUDING COPIES OF AGREEMENT FOR PURCHASE AND SALE OF TDRS, PAYMENT PROOF FOR HAVING PAID PURCHASE CONSIDERATIO N BY CHEQUES AND RECEIVED SALE CONSIDERATION BY CHEQUE, COPY OF DRC AND ALSO PROOF OF PAYMENT OF STAMP DUTY BY THE BUYERS OF SUCH TDRS AN D ALL THESE EVIDENCES UNDOUBTEDLY PROVE THE FACT THAT THE ASSES SEE HAS TRADED IN TDRS AND INCURRED LOSS WHICH IS BEYOND THE CONTROL OF THE ASSESSEE AND ALSO BASED ON MARKET CONDITIONS. THE LD.AR FURTHER SUBMITTED THAT EVERY BUSINESSMAN WOULD DO BUSINESS TO EARN PROFIT, BUT CERTAIN BUSINESS WOULD INCUR LOSS, BY THAT ITSELF, WOULD NO T BE A REASON FOR DISALLOWING LOSSES INCURRED FROM SUCH BUSINESS, MOR E PARTICULARLY, WHEN ASSESSEE HAS PROVED THE TRANSACTION BEYOND DOUBT. THE LD.AR FURTHER REFERRING TO THE COPIES OF TDR PURCHASE AND SALE AG REEMENTS, SUBMITTED THAT ALL THESE TDRS HAVE BEEN SOLD TO REPUTED BUILD ERS LIKE HDIL, KANDOR CORPORATION AND RAJKUMAR APARTMENTS AND THEY HAVE U TILISED THE TDRS IN THEIR PROJECTS AND ALL THESE DETAILS HAVE BEEN F URNISHED BEFORE THE AO. THE ASSESSEE, BY VIRTUE OF ALL THE SUPPORTING DOCUM ENTS INCLUDING BANK STATEMENTS, STAMP DUTY PAID DOCUMENTS, DRC UTILISAT ION FORMS, VARIOUS 9 ITA 4444/MUM/2015 AGREEMENTS AND UNDERTAKINGS, HAS PROVED BEYOND DOUB T THAT THESE TRANSACTIONS ARE GENUINE AND THE ASSESSEE HAS INCUR RED LOSSES FROM SALE OF TDRS. THE AO, ONLY ON THE GROUND THAT THE TDRS HAVE BEEN TRADED WITHIN A SHORT PERIOD OF 2 TO 3 DAYS DISALLOWED GEN UINE LOSS INCURRED IN THE BUSINESS WITHOUT ASSIGNING ANY REASONS. THE CI T(A), AFTER CONSIDERING RELEVANT SUBMISSIONS, HAS RIGHTLY DELE TED ADDITION MADE BY THE AO AND HIS ORDER SHOULD BE UPHELD. 8. THE LD.AR RELIED UPON THE DECISION OF HONBLE BO MBAY HIGH COURT IN HE CASE OF CIT VS HARESH D MEHTA (2017) 251 TAXM ZAN.346 AND THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS JANKI TEXTILES AND INDUSTRIES LTD (2003) 264 ITR 579 (GUJ ). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE ASSESSEE HAS INCURRED LOSS ON SALE OF TDR OF RS.2,10,38,238. THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING AGREEMENTS, BANK ST ATEMENTS, DRC FORMS AND PROOF OF PAYMENT OF STAMP DUTY ON TDRS TO PROVE THAT THE TRANSACTIONS ARE GENUINE. THE AO HAS DISALLOWED LO SS INCURRED ON SALE OF TDR ON THE GROUND THAT THE ASSESSEE HAS CLAIMED LOSS FROM SALE OF TDRS OF SUCH HUGE MAGNITUDE AND FAILED TO EXPLAIN T HE REASONS FOR SELLING THE TDRS AT SUCH HUGE LOSS WITHIN A VERY SH ORT SPAN OF TIME. ACCORDING TO THE AO, ALTHOUGH THE ASSESSEE HAS FURN ISHED CERTAIN 10 ITA 4444/MUM/2015 EVIDENCES, FAILED TO FILE DRC ENDORSEMENT FORMS WHI CH IS THE CRUCIAL DOCUMENT TO PROVE THE TRANSFER OF TDRS FROM ONE PER SON TO ANOTHER PERSON. THE AO FURTHER OBSERVED THAT WHEN THE DRC HOLDER INTENDS TO TRANSFER IT TO ANOTHER PERSON, HE MUST SUBMIT THE S AID DRC TO THE MUNICIPAL COMMISSIONER WITH AN APPROPRIATE APPLICAT ION FOR ENDORSEMENT OF THE NEW HOLDERS NAME ON THE CERTIFICATE. WITHOU T SUCH ENDORSEMENT, THE TRANSFER WILL BE INVALID AND THE CERTIFICATE WI LL CONTINUE TO BE IN THE NAME OF THE ORIGINAL HOLDER. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAS FILED NECESSARY EVIDENCES TO PROVE THE TRANSACT IONS AS GENUINE BY FILING VARIOUS DETAILS INCLUDING AGREEMENT FOR PURC HASE AND SALE OF TDRS, BANK STATEMENTS FOR HAVING PAID AND RECEIVED CONSID ERATION BY CHEQUES, DRC UTILISATION FORM AND BMC AGREEMENT ON WHICH STA MP DUTY IS DULY PAID, ULTIMATE BENEFICIARY OF TDRS. THE AO IGNORED ALL EVIDENCES FILED BY THE ASSESSEE ONLY ON THE GROUND THT NO PRUDENT B USINESSMAN WILL INCUR SUCH HUGE LOSS IN HIS BUSINESS, THAT TOO, WIT HIN A SHORT SPAN OF 2 TO 3 DAYS WITHOUT APPRECIATING THE FACT THAT EVERY BUS INESS WILL NOT YIELD PROFIT. THE ASSESSEE FURTHER CONTENDED THAT THE UL TIMATE BUYERS OF TDRS ARE REPUTED BUILDERS LIKE, HDIL, KANDOR CORPORATION AND GOPURAM DEVELOPERS AND ALL THESE DEVELOPERS HAVE UTILISED T HE TDRS IN THEIR PROJECTS WHICH IS EVIDENT FROM THE FACT THAT THE DR C UTILISATION FORM OF THE MUNICIPAL CORPORATION OF GREATER MUMBAI SHOWS THAT THE BUILDERS ARE THE 11 ITA 4444/MUM/2015 ULTIMATE HOLDERS OF TDRS. 10. HAVING HEARD BOTH THE PARTIES AND CONSIDERED MA TERIAL ON RECORD WE FIND MERIT IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT SUSPICION CAN ONLY LEAD TO A FURTHER INVESTIGATION BUT NOT A REASON FOR CONCLUSION THAT THE TRANSACTION IS INGENUINE WHEN THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE THE SAID TRANSACTIONS BEYOND DOU BT. IN THIS CASE, THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING AGREEM ENT COPIES, BANK STATEMENTS, AND DRC UTILISATION FORM, PAYMENT OF ST AMP DUTY AND ALSO ULTIMATE BENEFICIARY OF TDRS. THESE FACTS HAVE NOT BEEN DISPUTED BY THE AO. THE AO DISALLOWED LOSS ONLY ON THE GROUND THT NO PRUDENT BUSINESSMAN WILL INCUR SUCH A HUGE LOSS IN HIS BUSI NESS BY SELLING WITHIN A SHORT SPAN OF ONE TO TWO DAYS WITHOUT APPRECIATIN G THE FACT THAT EVERY BUSINESS TRANSACTION WILL NOT YIELD PROFIT. THE BU SINESSMAN WILL DECIDE ITS TRANSACTIONS DEPENDING UPON VARIOUS CIRCUMSTANCES I NCLUDING MARKET CONDITIONS WHICH MAY YIELD PROFIT OR LOSS. WHAT IS IMPORTANT IS WHETHER THE SAID TRANSACTION IS GENUINE OR NOT AND THE ASSE SSEE HAS FILED NECESSARY EVIDENCE TO PROVE THE TRANSACTIONS. IN T HIS CASE, THE AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT TH E TRANSACTIONS CARRIED OUT BY THE ASSESSEE ARE NOT GENUINE. ON THE OTHER HAND, THE ASSESSEE HAS FILED VARIOUS DETAILS TO PROVE THE TRANSACTIONS . THE PAYMENTS FOR PURCHASE OF TDRS HAD BEEN PAID BY CHEQUE AND THE SA LE CONSIDERATION 12 ITA 4444/MUM/2015 FOR TRANSFER OF TDRS HAS BEEN RECEIVED BY CHEQUE. THE PURCHASERS OF THE TDRS HAVE CONFIRMED THE TRANSACTIONS. THE ASSE SSEE ALSO FILED COPIES OF DRC FORMS WHICH UNDOUBTEDLY PROVE SALE OF TDRS TO THOSE DEVELOPERS. IF ONE GO THROUGH THE DOCUMENTS FILED BY THE ASSESSEE AND MONEY TRAIL FOR PAYMENT AND SALE OF TDRS, THERE IS ONE TO ONE CO-RELATION BETWEEN PURCHASE AND SALE AND ALSO TO THE DOCUMENTS . THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS INCORREC T IN COMING TO THE CONCLUSION THAT THE TRANSACTION CARRIED OUT BY THE ASSESSEE IS NOT GENUINE. 11. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE, THE ASSESSEE HAS RELIED UPON THE DECISION OF HONOURABLE JURISDIC TIONAL HIGH COURT IN THE CASE OF CIT VS HARESH D MEHTA (SUPRA). THE HON BLE HIGH COURT IN THE SAID CASE HELD THAT WHEN THE ASSESSEE HAS PROVE D WITH EVIDENCE ACTUAL PERFORMANCE OF WORK AND MOREOVER PAYMENTS WE RE MADE BY ACCOUNT PAYEE CHEQUES AFTER DEDUCTING TAX AT SOURCE , ASSESSEES CLAIM FOR DEDUCTION IN RESPECT OF SAID PAYMENT SHALL BE A LLOWED. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- 21. THE FIRST APPELLATE AUTHORITY APPROACHED THE M ATTER FROM THE ANGLE THAT IT WAS THE RESPONSIBILITY OF THE ASSESSING OFFICER TO INVE STIGATE FROM THE BANK ACCOUNTS, AND PARTICULARLY THE CHEQUES ISSUED, WHETHER THEY WERE ACTUALLY RECEIVED BY THE PARTIES OR WHETHER THERE HAS BEEN NO CREDIT FOR THE SAME IN TH EIR BOOKS OF ACCOUNT. MORE SO, WHEN THE ASSESSING OFFICER COULD HAVE VERIFIED THES E FACTS BY MAKING INQUIRIES FROM THE MUNICIPAL CORPORATION OF GREATER MUMBAI FOR IT RELEASED A TOTAL SUM OF RS. 4,67,62,320/- TO THE ASSESSEE. 22. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT IT DID NOT REST ITS CONCLUSIONS ONLY ON THE FINDING THAT THE ASSESSING OFFICER HAS NOT CARR IED OUT A COMPLETE EXERCISE. THE TRIBUNAL PERUSED THE MATERIAL PRODUCED ON RECORD. I T AGREED THAT THERE IS A PROOF OF 13 ITA 4444/MUM/2015 ACTUAL PERFORMANCE OF TRANSPORTATION WORK, LIFTING OF WASTE, PAYMENT OF TAX DEDUCTED AT SOURCE, FULL ADDRESSES AND CONFIRMATION OF ACCOU NTS WITH PERMANENT ACCOUNT NUMBER. EVEN THE MODE OF PAYMENT IS BY ACCOUNT PAYE E CHEQUES. IF THERE WAS FURTHER DOUBT ABOUT THE TRANSACTIONS, THE ASSESSING OFFICER WAS FREE TO MAKE INQUIRIES WITH THE REGIONAL TRANSPORT OFFICE. IT IS IN THESE CIRCU MSTANCES THAT THE TRIBUNAL AGREED WITH THE FIRST APPELLATE AUTHORITY. IT DID NOT AGRE E WITH THE OBSERVATION SO ALSO THE FINDING OF THE ASSESSING OFFICER THAT THE NOTICES C OULD NOT BE SERVED OR THE PARTIES DID NOT REMAIN PRESENT AND THAT WAS A RELEVANT FACTOR. HOWEVER, THE TRIBUNAL AGREED WITH THE FIRST APPELLATE AUTHORITY IN HOLDING THAT MERE NON-ATTENDANCE OR MERE NON- SERVICE WITHOUT ANYTHING MORE COULD NOT BE REASON E NOUGH TO SUSTAIN THE ADDITION. IT IS IN THESE CIRCUMSTANCES, THAT THE FIRST APPELLATE AUTHORITY HAS RIGHTLY STEPPED IN ACCORDING TO THE TRIBUNAL. WHEN THE NATURE OF THE E XERCISE UNDERTAKEN BY BOTH THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL IS AS AB OVE, THEN WE DO NOT SEE ANY PERVERSITY IN THEIR CONCLUSIONS, NOR CAN WE AGREE W ITH MR. MALHOTRA THAT THERE IS SUBSTANTIAL QUESTION OF LAW ARISING FROM THIS DELET ION OF ADDITION MADE BY THE ASSESSING OFFICER. WE DO NOT SEE ANY ERROR OF LAW A PPARENT ON THE FACE OF RECORD. IN THE CIRCUMSTANCES, WE FIND NO MERIT IN THE APPEAL. IT IS DISMISSED. NO COSTS. 12. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF JANKI TEXTILES & INDUSTR IES LTD (SUPRA). THE HONBLE HIGH COURT IN THE SAID CASE HELD THAT THE T RIBUNAL HAVING FOUND THAT ALL THE SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE ARE SUPPORTED BY CONTRACT NOTES AND BILLS OF RECOGNIZED SHARE BROKERS OF THE STOCK EXCHANGE AND ALSO OTHER DOCUMENTARY EVIDENCE SHOWING THAT ALL THE PAYMENTS HAD BEEN MADE / RECEIVED THROUGH ACCOU NT PAYEE CHEQUES, THEREFORE, IT CANNOT BE HELD THAT THE ASSE SSEE HAS ADOPTED A DEVICE TO DEFRAUD THE REVENUE AND, THEREFORE, THE C LAIM FOR LOSS IN SAID TRANSACTION WAS ALLOWABLE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- IT APPEARS FROM THE RECORD, AS MENTIONED BY THE TR IBUNAL IN ITS JUDGMENT THAT THE ASSESSEE-COMPANIES HAVE ENTERED INTO VARIOUS TRANSA CTIONS OF SHARE TRANSFER BUT THE AO HAS PICKED UP ONLY TWO TRANSACTIONS AND HAS NOT CONSIDERED OTHER TRANSACTIONS BEFORE ARRIVING AT THE FINDING THAT THE TWO TRANSAC TIONS WERE NOT GENUINE. THE AO HAS NOT REFERRED TO OTHER TRANSACTIONS ENTERED INTO BY THE ASSESSEE-COMPANIES IN TRANSFERRING THE SHARES. WHEN THE ASSESSEE-COMPANIE S HAVE ENTERED INTO SHARE 14 ITA 4444/MUM/2015 TRANSACTIONS OF VARIOUS COMPANIES THERE IS NO JUSTI FICATION FOR PICKING UP ONLY TWO TRANSACTIONS TO SHOW THAT THE TRANSACTIONS IN SHARE WAS NOT GENUINE ONLY BECAUSE THOSE TRANSACTIONS WERE MADE AT LOSS. THE SHARE PRICE MAY RISE OR MAY COME DOWN NEXT DAY AND TO MINIMIZE THE LOSS THE SHAREHOLDER MAY TRANSF ER HIS SHARES EVEN AT LOSS. THERE IS NO EVIDENCE ON RECORD PLACED BY THE REVENUE TO INDI CATE THAT THE DISPUTED SHARE TRANSACTIONS HAVE BEEN ENTERED INTO BETWEEN THE PAR TIES, WHO ARE CLOSE RELATIVES OR FRIENDS OR TO THE PERSONS HAVING COMMON INTERESTS, NOR THERE IS ANY MATERIAL PLACED ON RECORD TO INDICATE THAT THE SHARE TRANSACTIONS HAVE BEEN ENTERED INTO BETWEEN SAME PARTIES ADOPTING SAME MODUS OPERAND! FOR A REASONAB LE SPAN OF PERIOD. ON THE OTHER HAND, THE ASSESSEE HAS PLACED ON RECORD TO INDICATE THAT ALT THE SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE-COMPANIES HAVE BEEN SU PPORTED BY CONTRACT NOTES AND BILLS OF RECOGNIZED SHAREBROKERS OF STOCK EXCHANGE AND ALSO OTHER DOCUMENTARY EVIDENCE SHOWING THAT ALL THE PAYMENTS HAVE BEEN MA DE/RECEIVED THROUGH ACCOUNT PAYEE CHEQUES OR DRAFTS. IN THE ABSENCE OF THE BEST EVIDENCE, WHICH COULD HAVE BEEN PRODUCED BY THE REVENUE, IT CANNOT BE HELD THAT THE ASSESSEE-COMPANIES HAVE ADOPTED A DEVISE TO DEFRAUD THE REVENUE. FOR THE AFORESAID REASONS, THERE ARE NO GOOD OR SUFFICIENT GROUNDS TO INTERFERE WITH THE FINDINGS A RRIVED AT BY THE TRIBUNAL THAT THE SHARE TRANSACTIONS WERE GENUINE AND THE ASSESSEE-COMPANIE S ARE ENTITLED TO CLAIM BENEFIT UNDER THOSE TRANSACTIONS FOR THE LOSS SUFFERED. 13. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATIOS OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN DISALLOWING LOSS INCURRED ON SALE OF TDRS WHEN T HE ASSESSEE HAS PROVED BEYOND DOUBT THE SAID TRANSACTION IS GENUINE BUSINESS TRANSACTION WHICH IS SUPPORTED BY A VALID EVIDENCE. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS HAS RIGHTLY DELETE D ADDITION MADE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORDER OF C IT(A). HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF CIT(A) AND DISMI SS THE APPEAL FILED BY THE REVENUE. 14. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH JUNE, 2018 15 ITA 4444/MUM/2015 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI