BASUDEV AGARWAL, MUMBAI V. ACIT CEN CIR-34, MUMBAI

ITA 4670/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1616 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 11-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANE
• Keywords: Set aside; Capital Gains
• Section: 271(1)(c); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO 4670/MUM/2008 (ASSESSMENT YEAR: 2003-04) SHRI BASUDEV D AGARWAL, 51, SEABREEZE, 12, JUHU TARA ROAD, SANTACRUZ (WEST), MUMBAI -400 049 PAN: AADPA 6572 E VS ASSTT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -34, AAYAKAR BHAVAN, M K MARG, MUMBAI -400 020 APPELLANT RESPONDENT ASSESSEE BY: SHRI VIJAY MEHTA REVENUE BY: SHRI S S RANE ORDER PER PRAMOD KUMAR , ACCOUNTANT MEMBER 1. BY WAY OF THIS APPEAL, ASSESSEE HAS CHALLENGED C ORRECTNESS OF CIT (A) CENTRAL VI ORDER DATED 18TH JUNE 2008 FOR THE ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD COMMISSIONER OF INCOME TAX (APPEALS) LEGALLY ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED BY THE AO AND THE SAID ORDER IS BAD IN LAW I N AS MUCH THE ORDER WAS PASSED WITHOUT GIVING OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE OR REBUT THE FINDINGS OF THE AO. THEREFORE, THE ORDER PASSE D BY THE LD CIT (APPEALS) IS BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD CIT (APPEALS) LEGALLY ERRED IN CONFIRMING THE ORDER OF THE AO IN TREATING THE LONG TERM CAPITAL GAINS IN RESPECT OF SALE OF SHARES OF DATAB ASE FINANCE LTD AMOUNTING TO RS 5,23,444/- AS INCOME FROM OTHER SOU RCES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (APPEALS) LEGALLY ERRED IN CONFIRMING THE ORDER OF THE AO IN CHARGING INTEREST U/S 234B AT RS 89,010/- WHICH IS LEGALLY NOT CHARGEABLE (REFER 299 ITR (AT) 286). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (APPEALS) LEGALLY ERRED IN CONFIRMING THE ORDER OF THE AO IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE IT ACT, 1961. SHRI BASUDEV D AGARWAL 2 2. AS REGARDS GROUND NO.1, THE LEARNED REPRESENTATI VE FOR THE ASSESSEE DID NOT PRESS THIS GROUND HENCE THE SAME IS DISMISSED AS NO T PRESSED. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE RE ST OF THE ISSUES SO RAISED IN ASSESSEES APPEAL ARE SQUARELY COVERED, IN FAVOUR O F THE ASSESSEE, BY THE ORDER DATED 17.08.2009 PASSED BY CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2003-04 IN THE CASE OF KALPANA AGARWAL VS ACIT IN ITA 4671/M/2008. IN THE SAID ORDER, THE TRIBUNAL HAS, INTER ALIA , OBSERVED AS FOLLOWS:- 6. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING GENUINENESS OF LONG TERM CAPIT AL GAIN SHOWN BY THE ASSESSEE FROM SALE OF SHARES OF DFL. THE ASSESSEE HAD PURCHASED THE SHARES THROUGH SEBI REGISTERED BROKER AND THE INVESTMENT H AD BEEN DULY DECLARED IN THE RETURN FOR ASSESSMENT YEAR 2002-03. THE SHARES WERE SUBSEQUENTLY GOT DEMATERIALIZED AND WERE SOLD IN AY 2003-04 AGAIN TH ROUGH A REGISTERED BROKER AND THE SALE PRICE HAD BEEN RECEIVED THROUGH ACCOUN T PAYEE CHEQUE. THERE IS NO MATERIAL GATHERED BY THE REVENUE TO SHOW THESE T RANSACTIONS WERE BOGUS. THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF DIS CLOSURE OF THE ASSESSEE AT THE TIME OF SEARCH. THE ASSESSEE HAS CLAIMED THE S AID STATEMENT WAS UNDER PRESSURE FROM THE DEPARTMENT. THE INDIRECT PRESSUR E HAD BEEN PUT THROUGH LONG HOURS OF SEARCH AS WELL AS FREEZING OF BANK AC COUNT AND DEMAT ACCOUNT OF THE ASSESSEE. WE FIND THAT CIT (A) HAS ALREADY ACC EPTED THE CLAIM OF THE ASSESSEE THAT THERE WAS PRESSURE ON THE ASSESSEE TO MAKE DISCLOSURE AND SUCH DISCLOSURE WAS NOT IN CONFORMITY WITH THE CBDT CIRC ULAR. THIS FINDING OF THE CIT (A) HAS NOT BEEN CHALLENGED BY THE REVENUE AS N O APPEAL HAS BEEN FILED AND THEREFORE THIS FINDING HAS BECOME FINAL. IN OT HER WORDS REVENUE ITSELF HAS ACCEPTED THAT THE DISCLOSURE WAS UNDER PRESSURE. C IT (A) HAS HOWEVER AGREED WITH THE AO ON MERIT THAT THE TRANSACTION WAS NOT G ENUINE. BUT CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES WE ARE OF U NABLE TO AGREE WITH THE FINDING OF THE CIT (A) THAT THE SAID TRANSACTIONS W ERE NOT GENUINE. THE INVESTMENT IN PURCHASE OF SHARES HAD BEEN DECLARED BY THE ASSESSEE IN AY 2002-03 WHICH HAD BEEN ACCEPTED BY THE DEPARTMENT. THE SALES AND PURCHASES WERE THROUGH SEBI REGISTERED BROKERS AND PURCHASES AND SALES ARE SUPPORTED BY SALES BILLS AND CONTRACT NOTES. THERE IS NO MATERIAL PRODUCED BY THE REVENUE TO SHOW THAT THESE DOCUMENTS WERE BOGUS . THE SHARES OF COMPANY WERE LISTED ON A STOCK EXCHANGE AND NO DISC REPANCY HAS ALSO BEEN POINTED OUT EITHER IN RELATION TO PURCHASE PRICE OR SALES PRICE. MERELY BECAUSE SOME OTHER PERSONS HAD DECLARED BOGUS CAPITAL GAIN ON ACCOUNT OF TRANSACTIONS IN SHARES OF DFL CANNOT BE THE GROUND TO HOLD THAT THE TRANSACTIONS ARE BOGUS IN CASE OF THE ASSESSEE ALSO. THE FINDING OF CIT ( A) THAT SHARE TRANSACTIONS WERE NOT GENUINE IS NOT SUPPORTED BY ANY MATERIAL O N RECORD AND THE SAME HAS TO BE SET ASIDE. WE ACCORDINGLY SET ASIDE THE ORDE R OF CIT (A) AND DELETE THE ADDITION MADE. SHRI BASUDEV D AGARWAL 3 4. WE HAVE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY OUR ESTEEMED COLLEAGUES. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT (A) AND ALLOW THE GROUNDS OF APPEAL TAKEN BY THE ASSESS EE. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 16TH DAY OF OCTOBER 2009. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATE: 16TH OCTOBER 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CENTRALVI, MUMBAI. 4) THE CIT CENT III, MUMBAI. 5) THE D.R. B BENCH, ITAT, MUMBAI BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR CHAVAN* I.T.A.T., MUMBAI SHRI BASUDEV D AGARWAL 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 14.10.09 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 14.10.09 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER