SMT.PRIYA RAHUL ABHANI, MUMBAI V. INCOME TAX OFFICER WARD 3(2), MUMBAI

ITA 4581/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8133 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 24-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITNYA ANJARIA LD
• Assessee Lawyers: NEELKANTH KHANDELWAL LD
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 4581/MUM/2018 ASSESSMENT YEAR: 2014-15 SMT. PRIYA RAHUL ABHANI FLAT NO. 1101, MARIGOLD BLDG, SATGURU GARDEN, THANE-400 603. PAN: AFOPN8815 VS. I.T.O., 33(2)(1), PRATYAKSHKAR BHAWAN, BKC, BANDRA (E), MUMBAI-400 051. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NEELKANTH KHANDELWAL, LD.AR RESPONDENT BY : SHRI CHAITNYA ANJARIA, LD.DR DATE OF HEARING : 1 8 .07.2019 DATE OF PR ONOUNCEMENT : 1 8 - 07 - 2019 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23-05- 2018 PASSED BY LD CIT(A)-2, THANE AND IT RELATES TO THE ASSESSMENT YEAR 2014-15. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING ADDITION RELATING SALE OF SHARES MADE BY THE AO REJECTING THE CLAIM OF CAPITAL GAINS. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING LONG TERM CAPITAL GAINS OF RS.3,63,356/- AND CLAIMED THE SAME AS EXEMPT U/S 10(38) OF THE ACT. THE ASSESSEE HAD SOL D 1000 SHARES OF M/S NCL RESEARCH AND FINANCIAL SERVICES LTD FOR A VALUE OF RS.14,20,000/- IN APRIL, 2013. THE ASSESSEE HAD PURCHASED THE ABOVE SAID SHARES IN APRIL 2012 FOR A CONSIDERATION OF RS.1,79,648/-. THE ASS ESSEE HAD ALSO SOLD SHARES OF M/S DHANUS TECHNOLOGIES LTD FOR A SUM OF RS.5000/-. THE SAME [2] ITA NO. 4581/MUM/2018 SMT. PRIYA RAHUL ABHANI HAD BEEN PURCHASED FOR RS.11,40,028/- AND HENCE THE RE WAS A LOSS OF RS.11,35,028/- FROM THIS TRANSACTION. THE ASSESSEE HAD RECEIVED BONUS SHARES FROM M/S DHANUS TECHNOLOGIES LTD AND THE SAM E WAS SOLD FOR RS.12,000/-. THE AO RECEIVED INFORMATION FROM INVE STIGATION WING THAT THE TRADING IN ABOVE SAID SHARES FALLS UNDER THE CATEGO RY OF SUSPICIOUS LONG TERM CAPITAL GAINS ON SHARES, SINCE THEY HAVE BEEN PUT U NDER SURVEILLANCE MEASURE BY SEBI. THE AO, AFTER DISCUSSING THE MODU S OPERANDI ADOPTED FOR BOOKING LONG TERM CAPITAL GAIN BY RIGGING THE PRICE S, CAME TO THE CONCLUSION THAT THE TRANSACTIONS OF PURCHASE AND SALE MADE BY THE ASSESSEE IN THE ABOVE SAID SHARES ARE NOT GENUINE. IN SUPPORT OF T HE SAME, THE AO PLACED HIS RELIANCE ON THE STATEMENT GIVEN BY THE DIRECTOR OF M/S NCL RESEARCH AND FINANCIAL SERVICES LTD DURING THE COURSE OF SURVEY OPERATIO. ACCORDINGLY HE REJECTED THE CLAIM OF CAPITAL GAINS AND ASSESSED TH E SALE CONSIDERATION OF RS.14,20,000/- + RS.11,35,028/- AND RS.12,000/- AGG REGATING TO RS.25,67,028/- AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. THE LD CIT(A) GAVE PARTIAL RELIEF BY DELETING ADDITION OF RS.11,35,028/-, AS THE SAID SALE TRANSACTION HAS RESULTED IN LOSS. 4. THE LD A.R SUBMITTED FOLLOWING POINTS:- (A) THE LD CIT(A) WAS JUSTIFIED IN DELETING THE AD DITION OF RS.11,35,028/-. HOWEVER, THE SALE VALUE OF BONUS S HARES OF RS.12,000/- SHOULD HAVE ALSO BEEN DELETED BY HIM, S INCE HE HAS DELETED THE ADDITION RELATING TO ORIGINAL SHARES. (B) THE BROKERS FROM WHOM THE ASSESSEE HAD PURCHAS ED SHARES AND THROUGH WHOM THE ASSESSEE SOLD SHARES HAVE NOT BEEN IDENTIFIED AS TAINTED BROKERS. [3] ITA NO. 4581/MUM/2018 SMT. PRIYA RAHUL ABHANI (C) THE PURCHASE OF SHARES AND THE SOURCE OF PUR CHASES HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE PRECEDING YEAR. (D) THE SHARES HAVE BEEN RECEIVED IN D-MAT ACCOUNT OF THE ASSESSEE AND THEY HAVE BEEN SOLD THROUGH THE D-MAT ACCOUNT O NLY. (E) THE ASSESSEE IS MAKING INVESTMENT IN SHARES R EGULARLY, WHICH IS EVIDENCED BY THE FACT THAT THE ASSESSEE IS HOLDING SHARES IN NUMBER OF COMPANIES. ACCORDINGLY THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS DISBELIEVED THE TRANSACTIONS FOR THE REASON THAT THE THERE IS H UGE JUMP IN THE PRICES OF SHARES AND ALSO IN VIEW OF SURVEILLANCE MEASURE OF SEBI. HE SUBMITTED THAT THE AO HAS NOT ESTABLISHED ANY LINK BETWEEN THE ASS ESSEE AND THE DIRECTORS OF THE COMPANY. HE HAS ALSO NOT SHOWN THAT THE ASS ESSEE OR THE BROKERS WERE PART OF PRICE RIGGING ACTIVITIES. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE HAS PURCHASED AND SOLD THE SHARES IN THE N ORMAL COURSE. ACCORDINGLY HE SUBMITTED THAT THERE IS NO REASON TO SUSPECT THE TRANSACTIONS OF THE ASSESSEE. 5. ON THE CONTRARY, THE LD D.R SUBMITTED THAT TH E INVESTIGATION WING OF THE DEPARTMENT HAS UNEARTHED HUGE RACKET OF RIGGING OF PRICES OF THE SHARES WITH THE FRAUDULENT MOTIVE OF GENERATING TAX EXEMPT CAPI TAL GAINS. THE REVENUE HAS IDENTIFIED SUSPICIOUS SHARE TRANSACTIONS AND TH E SHARES OF M/S SUNRISE ASIAN LTD WERE ONE OF SUCH SHARES. HE SUBMITTED TH AT THE DIRECTORS OF THE ABOVE SAID COMPANY HAS ADMITTED THE PRICE RIGGING. ACCORDINGLY HE SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN CONFI RMING THE ADDITION. 6. THE LD A.R, IN THE REJOINDER, SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION ENTIRE SALE CONSIDERATION AS INCO ME. HE SUBMITTED THAT THE HONBLE RAJASTHAN HIGH COURT HAS UPHELD THE ORD ER OF TRIBUNAL IN [4] ITA NO. 4581/MUM/2018 SMT. PRIYA RAHUL ABHANI DELETING AN IDENTICAL ADDITION IN THE CASE OF CIT V S. SMT. POOJA AGARWAL (D.B. INCOME TAX APPEAL NO.385/2011 DATED 11.09.2017), SI NCE THE SHARES WERE TRANSACTED THROUGH STOCK EXCHANGE. HE SUBMITTED TH AT THE ASSESSEE, IN THE INSTANT CASE ALSO, HAS TRANSACTED THE PURCHASE AND SALE TRANSACTIONS THROUGH STOCK EXCHANGE ONLY. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED AND SOLD SHARES OF OTHER COMPANIES ALSO, LIST OF WHICH IS FURNISHED IN THE PAPER BOOK. 7. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORD. I NOTICE THAT THE AO HAS RECEIVED INFORMATION ABOUT SUSPICIOUS SHARE TRANSACTIONS AND ON THE BASIS OF THE SAME; HE HAS DISBELIEVED THE CLAIM OF LONG TERM CAPITAL GAINS. I NOTICE THAT THE ASSESSEE HAS PURCHASED SHARES THROU GH A BROKER NAMED VIJAY VISHAL SHAH AND SOLD SHARES THROUGH ANAND RAT HI SHARE AND STOCK BROKERS LTD. THUS, I NOTICE THAT THE PURCHASE AND SALE OF SHARES HAVE BEEN CARRIED OUT THROUGH TWO DIFFERENT BROKERS. IT IS N OT THE CASE OF THE AO THAT BOTH THE SHARE BROKERS REFERRED ABOVE HAVE BEEN IDE NTIFIED AS TAINTED BROKERS INVOLVED IN FRAUDULENT TRANSACTIONS. 8. THE SOURCE OF PURCHASE OF SHARES HAVE NOT BEE N DOUBTED BY THE AO IN THE IMMEDIATELY PRECEDING YEAR. FURTHER THE ASSESS EE HAS SHOWN THE PURCHASE OF IMPUGNED SHARES AS INVESTMENT IN THE BA LANCE SHEET. HENCE THE PURCHASE OF SHARES HAS BEEN ACCEPTED. FURTHER T HE SHARES HAVE BEEN RECEIVED IN THE D-MAT ACCOUNT OF THE ASSESSEE AND T HEY HAVE BEEN SOLD THROUGH THE D-MAT ACCOUNT ONLY. HENCE THE DELIVERY OF SHARES ALSO STAND PROVED. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECO RD TO SHOW THAT THE ASSESSEE WAS PART OF FRAUDULENT PRICE RIGGING. ACC ORDINGLY, IN THE ABSENCE OF ANY EVIDENCE TO IMPLICATE THE ASSESSEE OR TO PROVE THAT THE TRANSACTIONS ARE BOGUS, I AM OF THE VIEW THAT THE CAPITAL GAINS DECL ARED BY THE ASSESSEE CANNOT BE DOUBTED WITH. ACCORDINGLY, I AM OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN PARTIALLY CONFIRMING THE ADDIT ION. [5] ITA NO. 4581/MUM/2018 SMT. PRIYA RAHUL ABHANI 9. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITIONS. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 18-07-2019 SD/- ( B.R. BASKARAN) ACCOUNTANT MEMBER MUMBAI, DATED : 18 TH JULY,2019 *PP/SPS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER (ASSISTANTREGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI [6] ITA NO. 4581/MUM/2018 SMT. PRIYA RAHUL ABHANI DATE INITIAL WHETHER DICTATION PAD ENCLOSED WITH THE FILE : NO 1. DRAFT DICTATED ON 19.07.2019 YES SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19/7 MATTER TYPED P.P SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.07.2019 P.P JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19/07 PP SR.PS 6. DATE OF PRONOUNCEMENT 18/7 SR.PS 7. FILE SENT TO THE BENCH CLERK 19/7 PP SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER