ITO -25(2)(3), MUMBAI V. SANDEEP U.MEHTA, MUMBAI

ITA 4735/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0353 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO.4735/MUM/2014 ( ASSESSMENT YEAR : 201 0 - 1 1 ) ITO - 25(2)(3) ROOM NO.105, 1 ST FLOOR BUILDING NO.C - 11, PRATYAKSHAKAR BHAVAN BANDRA KURLA C OMPLEX BANDRA (E) MUMBAI 400 051 VS. SHRI SANDEEP U MEHTA B - 1111, RAJ MADHUR, DEVIDAS ROAD, BORIVALI (W), MUMBAI 400 013 PAN/GIR NO. AAGPM6585M APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI V. JUSTIN ASSESSEE BY SHRI NARESH JAIN DATE OF HEARING 09 / 11 /201 7 DATE OF PRONOUNCEME NT 05 / 02 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF CIT(A) - 35 , MUMBAI DATED 19/03/2014 FOR A.Y.201 0 - 11 IN THE MATTER OF ORDER PASSED U /S.143(3) OF THE INCOME TAX ACT, 1961. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE AO TO TREAT THE INCOME OT RS.80,37,125/ - EARNED ON SALE ON SHARES OT M/S. GLOBAL CAPITAL MARKET LTD AS LONG TERM CAPITAL GAIN WITHOUT APPRECIATING THE FACT THAT THE PRICE OF SHARES HAVE ABNORMALLY INCREASED BY 325% WITHIN A SHORT SPAN O F 18 MONTHS INDICATING A FABRICATED SHAM ARRANGEMENT.' ITA NO. 4735/MUM/2014 SHRI SANDEEP U MEHTA 2 2. 'ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDING THAT THE ASSESSEE INVESTED IN A COMPANY LISTED IN THE BSE WITHOUT CONSIDERING THE FACT THAT THE TRANSACTION OF THE ASSESSEE IS A COLOURFUL DEVICE AS THE DETAILS PROVIDED B Y THE BSE SHOWS THAT* THE SCRIPS OF THE SAID COMPANY IS OPERATOR DRIVEN STOCK CREATING CONTROLLED DEMAND FOR - FICTITIOUS CAPITAL GAIN.' 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O BE REST ORED.' 4. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND.' 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. DURING THE YEAR UNDER CONSIDE RATION ASSESSEE HAS RECEI VED REMUNERATION AND SHARE OF P R OFIT FROM THE PARTNERSHIP FIRM M/S. PARMAR CONSTRUCTION. THE ONLY ISSUE INVOLVED IN THIS CASE IS ABOUT TAXABILITY OF LONG TERM CAPITAL GAIN ON SALE OF SHARES. THE ASSESSEE IN TH E COMPUTATION OF INCOME CLAIMED , T HIS BEING THE LONG TERM CAP ITAL GAIN ON SALE OF SHARES AS EXEMPT U/S. 10(38). DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SPECIFICALLY ASKED TO FURNISH THE WORKING OF THE SAID CAPITAL GAIN ALONGWITH SUPPORTI NG EVIDENCE SUCH AS COPIES OF BROKERS' NOTES FOR SALES AND PURCHASE OF SHARES, D - MAT A/C. ETC., IN COMPLIANCE, ASSESSEE FURNISHED WORKING OF CAPITAL GAIN ON SALE OF SHARES. ON PERUSAL OF THIS WORKING AO OBSERVED THAT OUT OF TOTAL GAIN OF RS.80,16,818/ - ASS ESSEE EARNED LONG TERM CAPITAL GAIN ON SALE OF SHARE OF GLOBAL CAPITAL MARKET LTD., FOR RS. 80,37,125/ - , AND AFTER ADJUSTING 'LOSSES, ON SALE OF OTHER SHARES HAS DECLARED A NET PROFIT OF RS. 80,16,818/ - . IT IS ALSO OBSERVED THAT AS SESSEE HAS EARNED MAJOR PR OFIT ONLY IN A SINGLE SCRIP ITA NO. 4735/MUM/2014 SHRI SANDEEP U MEHTA 3 NAMELY - GLOBAL CAPITAL MARK ET LTD. HOWEVER, AO ADDED THE SAME U/S.68 BEING UNEXPLAINED CASH CREDIT ON THE PLEA THAT THERE WAS ABNORMAL RAISE IN THE PRICE OF SHARES WITHIN A PERIOD OF 18 MONTHS. 5. BY THE IMPUGNED ORDER, CIT(A ) DELETED THE DISALLOWANCE SO MADE BY THE AO AFTER OBSERVING AS UNDER: - I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLANT AND THE CONTENTIONS AND FINDINGS OF THE AO. I FIND MERIT IN THE ARGUMENTS ADVANCED BY THE APPELLANT' THAT THE APPELLANT GETS ADV ISE FOR INVESTMENT BECAUSE HE IS OTHERWISE ENGAGED IN THE ACTIVITY OF CONSTRUCTION AND, THEREFORE, HE IS DEPENDENT ON ADVISE OF BROKERS AND SPECIALISTS FOR THE PURPOSE OF INVESTMENT. THERE IS ALSO MERIT IN THE ARGUMENT ADVANCED THAT THE SHARES OF GLOBAL CA PITAL MARKET LTD: ARE NOT THE ONLY SHARES THAT THE APPELLANT HAS INVESTED IN. THE APPELLANT HAS INVESTED IN 1,50,000/ - OTHER SHARES IN. 10 DIFFERENT COMPANIES IN WHICH HE HAD MADE INVESTMENT (VALUED AT RS.42,96,798/ - THE APPELLANT IN .THIS CASE I.E. GLOBA L CAPITAL MARKET LTD. INVESTED IN A COMPANY - LISTED IN THE BOMBAY STOCK EXCHANGE; COPY OF THE BROKERS NOTE HAS BEEN GIVEN; THE BROKER HAS DULY CONFIRMED THE TRANSACTION AND THE APPELLANT HAS PAID STT DUE ON THE SAID TRANSACTION. TO THIS EXTENT IT CANNOT BE SAID THAT THE TRANSACTION IS A MERE SHAM AND THE MERE FACT OF THE INCREASE IN THE VALUE OF SHARES IN THE PRESENT OF ALL FACTS ABOVE CANNOT BE SUFFICIENT TO HOLD T HE TRANSACTION BOGUS. IN THE LIGHT OF THE ABOVE FACTS, I AGREE WITH THE APPELLANT THAT THE SA ID TRANSACTION SHOULD BE TREATED AS LONG TERM CAPITAL GAIN. 6. GROUND NOS.5 & 6 ARE CONSEQUENTIAL IN NATURE AND DO NOT REQUIRE SEPARATE ADJUDICATION. 6. AGAINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN FURTHER APPEAL BEFORE US. 7. WE HAVE CONSIDERED RI VAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT DETAILED FINDING HAS BEEN RECORDED BY CIT(A) FOR ARRIVING AT THE CONCLUSION THAT ASSESSEE HAS MADE GENUINE INVESTMENT IN SHARES WHICH WAS LISTED AT THE BOMBAY STO CK ITA NO. 4735/MUM/2014 SHRI SANDEEP U MEHTA 4 EXCHANGE. BROKER HAS ALSO CONFIRMED THE TRANSACTION AND ASSESSEE HAS PAID STT DUE ON SUCH TRANSACTION. 8. THE DETAILED FINDINGS SO RECORDED BY CIT(A) AT PARA 5 HAVE NOT BEEN CONTROVERTED BY LEARNED DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCOR DINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 05 / 02 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 05 / 02 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITA T, MUMBAI 6. GUARD FILE. //TRUE COPY//