Shri Sanwarmal Somani, Indore V. The Dy. CIT, Indore

ITA 491/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2715 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 20-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S S DESHPANDE
• Keywords: Capital asset; Revised return

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.R. KAUSHIK, ACCOUNTANT MEMBER ITA NO.491/IND/2009 A.Y. - 2006-07 SANWARMAL SOMANI, THROUGH L/H NAROTTAM SAMANI, C/O SOMANI BROTHERS, 470, JAWAHAR MARG, INDORE PAN ALWPS 1434 P APPELLANT VS. DY.CIT-4(1), INDORE RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE, CA RESPONDENT BY : SHRI P.K. MITRA, SR. DR O R D E R PER JOGINDER SINGH THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LEARNE D CIT(A)-II, INDORE DATED 16.7.2009 WHEREIN CALCULATION OF CAPIT AL GAINS BY TAKING THE SALE CONSIDERATION OF SHARES AT RS.24,56,340/- AGAI NST THE ACTUAL RECEIVED AMOUNT OF RS.16,38,560/- AND CONSEQUENT AD DITION OF RS. 9,13,592/- IN ASSESSMENT YEAR 2006-07 HAS BEEN CONF IRMED. 2 2. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT THE FIRST CHEQUE WAS WRONGLY ISSUED BY SMT. SOMANI AND ONLY THE SUBSEQUENT CHEQUE OF RS.16,38,560/- ISSUED IN CONNE CTION WITH SHARES OF M/S. MIDEX OVERSEAS LTD. WAS RELEVANT. IT WAS CL AIMED THAT THE RESULTANT CAPITAL GAIN OF RS.1,48,502/- WAS SHOWED IN ASSESSMENT YEAR 2005-06 AND THE SALE CONSIDERATION WAS NOT PAID AT THE TIME OF TRANSFER OF SHARES BUT THE ACTUAL AMOUNT WAS PAID BY CHEQUE WHICH WAS CREDITED ON 30.3.2006. THE CRUX OF THE ARGUMENTS IS THAT THE SHARES WERE TRANSFERRED DURING THE ASSESSMENT YEAR 2005-06 (ON 10.10.2004), THEREFORE, THESE CANNOT BE TAXED IN ASSESSMENT YEAR 2006-07. ON THE OTHER HAND, THE LD. SR. DR STRONGLY DEFENDED THE IM PUGNED ORDER BY CONTENDING THAT IT WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE AND IT WAS A MANAGED AFFAIR. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT A CHEQUE OF RS.24,56,3 40/- WAS ISSUED BY SMT. MEENAXI SOMANI, DAUGHTER-IN-LAW OF THE ASSESSE E ON 16.3.2006 BUT THE SAME WAS RETURNED ON THE SAME DAY ITSELF AN D ANOTHER CHEQUE FOR RS.16,38,560/- WAS CREDITED IN THE ACCOUNT OF T HE ASSESSEE ON 30.3.2006. THE LD. ASSESSING OFFICER WAS OF THE VIE W THAT SINCE THE CHEQUES OF RS.24,56,340/- AND RS.16,38,560/- WERE H AVING CLOSE NEXUS, THEREFORE, THE ASSESSEE WAS ASKED TO CLARIFY THE SA ME. THE REPLY OF THE 3 ASSESSEE DATED 17.12.2008 WAS NOT ACCEPTED BY THE L D. ASSESSING OFFICER AND HE WAS OF THE VIEW THAT THE CAPITAL GAI N IS ASSESSABLE IN ASSESSMENT YEAR 2006-07 ON THE FOLLOWING REASONS: 1. THE CAPITAL ASSET BEING SHARE OF A COMPANY THE TRANSFER HAS TO BE CONSIDERED AS DEFINED IN SECTION 2(47)(1). 2. NOT EVEN A PART OF SALE CONSIDERATION WAS PASSED ON EVEN AS A TOKEN PAYMENT DURING THE F.Y. 2004-05. 3. THERE IS NO EVIDENCE AT ALL TO ESTABLISH THE SHARE TRANSFER DURING F.Y. 2004-05. 4. THE ENTIRE SALE CONSIDERATION WAS PASSED ON DURING F.Y. 2005-06 (A.Y. 2006-07). 5. THE ASSESSEE HAS NOT REPORTED CAPITAL GAIN IN THE ORIGINAL RETURN OF A.Y. 2005-06. THE RETURN OF A.Y. 2005-06 WAS REVISED WITH A PURPOSE TO SHOW THE CAPITAL GAIN IN A.Y. 2005-06. THIS ITSELF SHOWS THE AFTER THOUGHT INSTEAD OF ANY OMISSION IN THIS REGARD. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY AFFIRM ED THE ASSESSMENT ORDER. IF THE TOTALITY OF FACTS AND THE ARGUMENTS A DVANCED BY THE LD. RESPECTIVE COUNSEL ARE ANALYSED, IT IS AN ADMITTED FACT THAT THE ASSESSEE ALONG WITH HIS SON AND DAUGHTER-IN-LAW WERE DIRECTO RS OF M/S. MIDEX OVERSEAS LTD., 1,63,856 SHARES OF THE COMPANY WERE SOLD TO THE DAUGHTER-IN-LAW ON 10.10.2004 AND THE SAME WERE HAN DED OVER TO HER ALONG WITH DULY EXECUTED SHARE TRANSFER FORM. THE C APITAL GAIN WAS ALSO DECLARED IN ASSESSMENT YEAR 2005-06 AND OFFERED FOR TAXATION IN ASSESSMENT YEAR 2005-06 ITSELF. EVEN IF THE CHEQUE AMOUNTING TO RS.24,56,340/- WAS WRONGLY ISSUED, IT WAS NOT ENCAS HED AND ONLY THE 4 AMOUNT OF RS.16,38,560/- WAS ENCASHED AND THE SAME WAS DECLARED BY FILING A REVISED RETURN FOR ASSESSMENT YEAR 2005-06 , WHICH HAS BEEN ACCEPTED BY THE REVENUE AND NO ACTION HAS BEEN TAKE N SO FAR TO CHALLENGE THE CLAIM OF THE ASSESSEE THAT THE CAPITA L GAIN IN QUESTION, AS DECLARED BY THE ASSESSEE, WAS LIABLE TO INCOME-TAX IN ASSESSMENT YEAR 2005-06. SINCE THE CAPITAL GAIN ON THIS VERY TRANSA CTION HAS ALREADY BEEN OFFERED FOR TAX BY THE ASSESSEE IN ASSESSMENT YEAR 2005-06 AND THE RELEVANT REVISED RETURN HAS BEEN ACCEPTED BY TH E REVENUE, THERE IS NO JUSTIFICATION FOR CONSIDERING THE SAME TRANSACTI ON IN ASSESSMENT YEAR 2005-06 FOR BRINGING TO TAX AGAIN IN ASSESSMENT YEA R 2006-07. WE, THEREFORE, SEE NO REASON TO UPHOLD THE ACTION OF TH E LOWER AUTHORITIES. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27 TH JULY, 2010. SD SD (B.R. KAUSHIK) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JULY, 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!