Shri Prakashchandra Bhikhbhai Patel, Nadiad V. The Income tax Officer,Ward-3, Nadiad

ITA 486/AHD/2013

• Counselvise Citation: 48620514 RSA 2013
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: URVASHI SHODHAN A R
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , , , , BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ' ! ' ! ' ! ' ITA NO. 486/AHD/2013 ASSESSMENT YEAR : 2008-09 SHRI PRAKASHCHANDRA BHIKHABHAI RAVAL C/O M/S. RAVAL BHIKHABHAI MAUTHURDAS OPP. GOVERNMENT HOSPITAL, KATHAL, NADIAD V/S . ITO, WARD-3, NADIAD PAN NO. AB RPR9182N (APPELLANT) .. (RESPONDENT) #$ % & / BY APPELLANT MS. URVASHI SHODHAN, A.R. '(#$ % & /BY RESPONDENT SHRI O. P. BATHEJA, SR. D.R. )* % /DATE OF HEARING 31.10.2013 +,- % /DATE OF PRONOUNCEMENT 10.01.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF ASSESSEE WHICH H AS EMANATED FROM THE ORDER OF CIT(A)-IV, BARODA, DATED 31.12.2012 FO R ASSESSMENT YEAR 2008- 09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIR MING ACTION OF AO IN MAKING ADDITION OF RS. 15, 69, 506/- AS UNACCOUNTED INVESTMENT IN SHARE TRANSACTIONS INVOKING PROVISIONS OF SECTION 6 9 OF THE ACT. BOTH ITA NO. 486/AHD/2013, A.Y. 08-09 PAGE 2 THE LOWER AUTHORITIES ACCEPTED PART INVESTMENT IN S HARES WHILE CONFIRMING ADDITION OF THE BALANCE AMOUNT SIMPLY AD DING TOTAL SHARE TRANSACTIONS DURING THE YEAR. LD. CIT (A) OUGHT TO HAVE DELETED THE ADDITION APPRECIATING SUBMISSION OF THE APPELLANT T HAT INVESTMENT WAS EXPLAINED TO BE OUT OF TRANSACTIONS OF SALE OF SHARES COMPLETELY ACCOUNTED FOR IN THE BOOKS. 2. LD. CIT (A) FURTHER ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE SHORT TERM CAPITAL GAINS ON SALE OF T HE VERY SAME SHARES WAS COMPUTED BY AO WHILE FRAMING THE ASSESSM ENT IGNORING THE SUBMISSION THAT PART PURCHASES OF THE SHARES WAS FUNDED FROM THE SALE OF THE SAME SHARES EXPLAINING SOURCE OF SHARE INVESTMENT. 2. BOTH THE GROUNDS 1 & 2 ARE INTERLINKED AGAINST C ONFIRMING ACTION OF AO IN MAKING ADDITION OF RS. 15, 69, 506/- AS UNACCOUN TED INVESTMENT IN SHARE TRANSACTIONS INVOKING PROVISIONS OF SECTION 69 OF T HE ACT. THE A.O. OBSERVED THAT THERE WAS AN INFORMATION WITH THE A.O. THAT AS SESSEE HAS INVESTED IN SHARES OF RS.19,88,094/-. THE ASSESSEE WAS GIVEN R EASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE IN RESPONSE TO THIS, THE ASSESSEE HAD FURNISHED THE STATEMENT OF TRANSACTION MADE WITH THE RELIGARE SEC URITIES LTD. ON VERIFICATION OF THE STATEMENT, IT WAS FOUND THAT TO TAL INVESTMENT IN SHARES WAS RS.24,95,006/-. THE ASSESSEES EXPLANATION BEFORE THE A.O. WAS THAT ASSESSEE HAD BORROWED FUND FROM AGRICULTURIST AND D EPOSITED IN HDFC BANK ACCOUNT. OUT OF THIS BANK ACCOUNT, THEY HAD ISSUED THE CHEQUES FOR PURCHASE OF SHARE SECURITIES FROM RELIGARE SECURITIES LTD. AFTER CONSIDERING THE ASSESSEES REPLY, REMAINING INVESTMENT IN SHARES TO THE TUNE OF ITA NO. 486/AHD/2013, A.Y. 08-09 PAGE 3 RS.15,69,506/- WAS FOUND UNEXPLAINED. THUS, HE MAD E ADDITION OF THE SAME AMOUNT IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHICH HAS BEEN CONFIR MED BY HIM BY OBSERVING THAT DURING THE COURSE OF ASSESSMENT PROCEEDING, TH E APPELLANT HAD NOT FURNISHED EVIDENCE WITH REGARD TO THE SOURCE OF REM AINING AMOUNT OF RS.15,69,506/-, WHICH WAS INVESTED IN SHARES. EVEN DURING THE COURSE OF APPELLATE PROCEEDING, THIS AMOUNT HAD NOT BEEN EXPL AINED WITH EVIDENCES BEFORE HIM. THE APPELLANT HAD SUBMITTED BEFORE THE CIT(A) VIDE SUBMISSION DATED 01.05.2012 THAT THE A.O. HAD MISPLACED BY NOT CONSIDERING THE SALE OF SHARES MADE OUT OF PURCHASE AND SHARES ON WHICH SHO RT TERM CAPITAL GAIN OF RS.1,11,088/- IS ASSESSED. IN OTHER WORDS, THE APP ELLANT HAD MERELY SUBMITTED THAT HE HAD PURCHASED SHARES WORTH RS.24, 95,007/- AND OUT OF THE SAID SHARES, HE HAD SOLD SHARES OF RS.17,02,822/-, COST OF WHICH WAS RS.15,69,506/-. BUT THIS DOESNT HELP TO EXPLAIN T HE SOURCE OF INVESTMENT IN SHARES. THE PURCHASE AND SALE OF THE SHARES HAD GO T NOTHING TO DO WITH THE SOURCE OF INVESTMENT OF ABOVE AMOUNT OF RS.15,69,50 6/-. THE APPELLANT HAD MISERABLY FAILED TO FURNISH THE REQUIRED DOCUMENTAR Y EVIDENCES/DETAILS/RECORDS ETC. SO FAR AS SOURCE OF THIS AMOUNT OF RS.15,69,50 6/- ARE CONCERNED. THUS, HE CONFIRMED THE ADDITION MADE BY THE A.O. 4. NOW, THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE APPELLANT CONTENDED THAT THE RELIGARE SECURITIES LTD. PURCHAS ED AND SOLD SHARES ON BEHALF OF THE ASSESSEE AND TOTAL TRANSACTIONS WERE AS UNDER: ITA NO. 486/AHD/2013, A.Y. 08-09 PAGE 4 TOTAL PURCHASE VALUE OF THE SHARE FOR THE YEAR RS .24,92,186/- AMOUNT REALIZED ON SALE OF SHARES RS.15,45,638/- LESS: PURCHASE VALUE OF SHARES SOLD RS.14,34,054/ - SHORT TERM CAPITAL GAIN OFFERED TO TAX RS. 1,11,088/- STOCK IN HAND RS.10,58,132/- THESE SHARES WERE PURCHASED ON BEHALF OF THE ASSESS EE BY RELIGARE SECURITIES LTD. FROM FUNDS TRANSFERRED BY HIM FROM HDFC BANK AMOUNT REALIZED FROM SALE OF SHARES WAS REINVESTED BY FURT HER PURCHASE OF SHARES. BOTH THE AUTHORITIES ERRED IN CONSIDERING TOTAL PUR CHASES OF SHARES AS INVESTMENT OF THE ASSESSEE AND FURTHER ERRED IN NOT CONSIDERING THE SALE OF SHARES MADE OUT OF PURCHASES ON WHICH SHORT TERM CA PITAL GAIN IS ASSESSED. THUS, THE INVESTMENT IN SHARES BY THE ASSESSEE ONLY OF RS.9,25,500/- THAT IS EXPLAINED AND ACCEPTED BY THE AUTHORITIES. SHARES REMAINING UNSOLD ARE REFLECTED AS STOCK IN HAND. THE FINANCIAL STATEMEN T FROM RELIGARE SECURITIES LTD. HAD BEEN TALLIED WITH HDFC BANK STATEMENT. TH E SOURCE OF INVESTMENT IN SHARES IS FULLY EXPLAINED AND ADDITION U/S. 69 MAY BE DELETED. THE APPELLANT ALSO FILED COPY OF PAPER BOOK IN SUPPORT OF HIS ARG UMENT. AT THE OUTSET, LD. SR. D.R. VEHEMENTLY RELIED UPON THE ORDER OF THE CIT(A) AND REQUESTED TO CONFIRM THE ADDITION. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ON VERIFICATION OF PAGE NO.1 I.E. COPY OF ACCOUNT WITH RELIGARE SECURITIES LTD. AS WELL AS COPY OF BANK ACCOUNT MAI NTAINED WITH THE HDFC BANK SHOWS THAT ASSESSEE HAS TRANSFERRED MONEY FROM THE HDFC BANK ACCOUNT TO RELIGARE SECURITIES LTD. THE RELIGARE SE CURITIES LTD. ALSO ITA NO. 486/AHD/2013, A.Y. 08-09 PAGE 5 PURCHASED AND SOLD SHARES DURING THE YEAR AND PROFI T GENERATED ON BEHALF OF THE ASSESSEE HAD BEEN CREDITED IN THE ACCOUNT OF TH E ASSESSEE IN THE BOOKS OF RELIGARE SECURITIES LTD. THEREFORE, CIT(A) WAS NOT RIGHT IN NOT APPRECIATING THE EVIDENCE FURNISHED BY THE APPELLANT BEFORE HIM. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT TO RECONSIDER THE EV IDENCES, AS DISCUSSED ABOVE. NEED NOT TO MENTION THAT A REASONABLE OPPOR TUNITY IS REQUIRED TO BE GIVEN. THIS GROUND OF APPEAL IS SET ASIDE TO THE C IT(A). 6. IN THE RESULT, THE ASSESSES APPEAL IS ALLOWED F OR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 10.01.2014 SD/- SD/- ( MUKUL KR. SHRAWAT) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA . . . . % %% % '/ '/ '/ '/ 0/- 0/- 0/- 0/- / COPY OF ORDER FORWARDED TO:- 1. #$ / APPELLANT 2. '(#$ / RESPONDENT 3. 44 5 / CONCERNED CIT 4. 5- / CIT (A) 5. /9: ') , , / DR, ITAT, AHMEDABAD 6. :<= >? / GUARD FILE. BY ORDER/ . , @/ 4B , '