ACIT, Meerut V. Aditya Gupta, Meerut

ITA 4938/DEL/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8888 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-02-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 08-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Earning of tax free income; Non passing of speaking order; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. C. M. GARG , JM ITA NO. 4938/DEL/2011 : ASSTT. YEAR : 2002 - 03 ASSTT. COMMISSIONER OF I NCOME TAX CIRCLE - 1, MEERUT VS SH. ADITYA GUPTA, 219, RAILWAY ROAD, MEERUT (APPELLANT) (RESPONDENT) PAN NO. AA QPG8109C ASSESSEE BY : SH. M. P. RASTOGI, ADV. REVENUE BY : Y. KAKKAR, DR DATE OF HEARING : 24 .02 .2015 DATE OF PRONOUNC EMENT : 27 .02 .2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 11.07.2007 OF LD. CIT(A), MEERUT . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER IN THE FACTS AND CI RCUMSTANCES OF THE CASES, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN LAW AND FACTS IN ALLOWING THE LONG TERM CAPITAL LOSS OF RS. 1,04,45,051/ - DESPITE THE FACT THAT AO HAD ADOPTED THE VALUE OF SHARES BEING UNQUOTED SOLD BY THE ASSESSEE AFTER DETAILED WORKING WHICH HAS BEEN TOTALLY IGNORED. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASES, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) WAS JUSTIFIED IN LAW IN DELETING THE ADDITION DESPITE THE FACT THAT THE HON BLE ITAT HAD CATEGORICALLY OBS ERVED THAT ITA NO. 4938 /DEL /2011 ADITYA GUPTA 2 EARNING OF EXEMPT INCOME OF RS. 6.30 CRORES INDICATED THAT ASSESSEE WAS WELL VERSED WITH THE INVESTMENTS AND BUSINESS ACTIVITIES WHO WOULD NOT VENTURE IN A TRANSACTION FOR BOOKING LOSS TO THIS MAGNITUDE DESPITE WHICH THE CIT(APPEALS) HAS IGNORED AOS REASONING FOR ADDITION THAT THERE WAS NO LOGIC BEHIND SELLING SHARES JUST FOR RS. 18,75,000/ - WHICH WERE PURCHASED FOR RS. 1,12,50,000/ - . 3. WHETHER LD. CIT(APPEALS) WAS JUSTIFIED IN ACCEPTING THE VIEW OF HIS PREDECESSOR DESPITE CATEGORICAL OBSERVATI ON OF LD. ITAT THAT THERE MUST BE SOMETHING UNDERLYING AND THAT THE OBSERVATIONS MADE BY THEM WOULD NOT IMPAIR OR INJURE THE CASE OF AO. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2002 WHICH WERE PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 28.02.2003. LATER ON, THE CASE WAS REOPENED U/S 147 R.W.S 148 OF THE ACT AND THE AO DURING THE COURSE OF REASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD SHOWN A LONG TERM CAPITAL GAIN OF RS. 53,632/ - ON SALE OF 32 ICI CI B ONDS AND ALSO HAD SHOWN LONG TERM CAPITAL LOSS OF RS. 41,80 ,724/ - WHICH WAS CARRIED FORWARD TO THE NEXT YEAR. THE AO ALSO NOTICED THAT THE ASSESSEE PURCHASED 15,000 EQUITY SHARES OF M/S MANKIND PHARMA (P) LTD. ON 31.03.2000 FOR A TOTAL CONSIDERATION OF RS. 1,12,50,000/ - AND SOLD THOSE SHARES AS PER FOLLOWING DETAI LS: ITA NO. 4938 /DEL /2011 ADITYA GUPTA 3 DATE OF SALE NO. OF SHARES SOLD DISTINCT NO. ALLOTTED SALE RATE SALE PRICE TO WHOM SOLD 28/05/2001 8400 47045 TO 58744 125 1050000 SMT. PRABHA ARORA 28/05/2001 6600 58745 TO 62044 125 825000 SH. RAJEEV JUNEJA THE ASSESSEE HAD SHOWN A LOSS OF RS. 1,04,45,051/ - FROM THE ABOVE TRANSACTION. THE AO OBSERVED THAT THE BOOK VALUE OF THE SHARE AT THE TIME OF PURCHASE MADE BY THE ASSESSEE WAS AT RS. 533/ - PER SHARE WHEREAS ON 31.03.2001 THE BOOK VALUE WAS AT RS. 665/ - PER SHARE. THE AO ALSO OBSERVED THAT T HOSE SHARES WERE SOLD AT SUCH A HUGE LOSS WITHIN SUCH A SHORT PERIOD TO THE MANAGING DIRECTOR OF THE COMPANY AND HE FORMED AN OPINION THAT IT WAS A COLLUSIVE TRANSACTION. HE, THEREFORE, FOR THE PURPOSE OF CALCULATION OF CAPITAL LOSS WORKED OUT THE SALE ON THE BASIS OF BOOK VALUE ON THE DATE OF SALE I.E. RS. 665/ - PER SHARE AND ACCORDINGLY WORKED OUT THE LONG TERM CAPITAL LOSS AT RS. 23,45,051/ - AND DISALLOWED A SUM OF RS. 81,00,000/ - . 4. BEING AGGRIEVED T HE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WH O ALLOWED RELIEF TO THE ASSESSEE , AGAINST THE SAID ORDER , T HE ASSESSEE PREFERRED AN APPEAL TO THE ITAT IN ITA NO. 4370/DEL/2007 WHE REIN VIDE ORDER DATE 16.12.2010, T HE MATTER WAS RESTORED TO THE LD. CIT(A) FOR FRESH ADJUDICATION AND THE LD. CIT(A) AFTER CO NSIDERING THE SUBMISSIONS OF TH E ASSESSEE ALLOWED THE RELIEF TO THE ASSESSEE. ITA NO. 4938 /DEL /2011 ADITYA GUPTA 4 5. BEING AGGRIEVED THE DEPARTMENT IS IN APPEAL. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THE ISSUES UNDER CONSIDERATION IS SQUARELY COVERED VIDE ORDER DATED 09.08.2012 IN THE CASE OF ACIT VS SH. ASHISH GUPTA IN ITA NO. 225/DEL/2012 FOR THE ASSESSMENT YEAR 2002 - 03 ( COPY OF THE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD ) . IT WAS FURTHER STATED THAT SH. ASHISH GUPTA IS BR OTHER OF THE ASSESSEE AND THE TRANSACTION IN SHARES WAS SIMILAR IN BOTH THESE CASES AND THAT THE ITAT VIDE ORDER DATED 16.12.2010 RESTORED THE ISSUE TO THE LD. CIT(A) DECIDING THE APPEALS OF THE ASSESSEE AS WELL AS OF SH. ASHISH GUPTA BY PASSING A COMMON O RDER. IN HER RIVAL SUBMISSIONS THE LD. DR VEHEMENTLY ARGUED THAT THE SHARES WERE NOT QUOTED IN THE MARKET AND T HE AO RIGHTLY WORKED OUT THE SAL E PRICE ON THE BASIS OF BOOK VALUE AND RIGHTLY MADE THE DISALLOWANCE WHILE WORKING OUT THE CAPITAL GAIN . T HEREFOR E, THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE RELIEF TO THE ASSESSEE. 6. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS DURGA PRASAD MORE 82 ITR 540 (SC) SUMATI DAYAL VS CIT 214 ITR 801 (SC) 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOT H THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, I T IS NOTICED THAT THE ITAT IN THE FIRST INNING RESTORED THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) BY PASSING A COMMON ORDER DATED ITA NO. 4938 /DEL /2011 ADITYA GUPTA 5 16.12.2010 IN ASSESSEE S CASE IN ITA NO. 4370/DEL/2007 AND IN THE CASE OF HIS BROTHER SH. ASHISH GUPTA IN ITA NO. 4371/DEL/2007 . T HE LD. CIT(A) DECIDED THE CASE ON THE BASIS OF DIRECTIONS GIVEN BY THE ITAT IN THE AFORESAID ORDER . THEREAFTER THE DEPARTMENT PREFERRED APPEALS AGAI NST THE ORDERS OF THE LD. CIT(A) AND THE APPEAL IN ITA NO. 225/DEL/2012 IN THE CASE OF SH. ASHISH GUPTA, THE BROTHER OF THE ASSESSEE HAS BEEN ADJUDICATED VIDE ORDER DATED 09.08.2012 BY OBSERVING IN PARA 8 OF THE SAID ORDER AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE CASE OF THE ASSESSEE HAD TRAVELED UP TO THE STAGE OF ITAT AND HON BLE ITAT VIDE ITS ORDER DATED 16.12.2010 HAD REMANDED BACK TO THE OFFI CE OF LD. CIT(A) BEING A NON SPEAKING ORDER OF LD. CIT(A) AND AGAIN IN THE SECOND ROUND OF APPEAL THE CASE HAS REACHED BEFORE US. WE HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND HAVE GONE THROUGH THE ASSESSMENT ORDER, LD. CIT(A) S ORDER AND ORDER OF THE HON BLE ITAT, WE HAVE NOTED THAT SALE AND PURCHASE OF SHARE WAS DONE THROUGH CHEQUES AND TRANSFER OF SHARES WAS PROPERLY SUPPORTED BY THE TRANSFER DEEDS AND COMPLETE FORMALITIES WERE DONE BY THE ISSUING COMPANY IN RESPECT OF ALLOTMENT OF SHARES AND TR ANSFER OF SHARES. NOTHING ADVERSE WAS BROUGHT BY THE ASSESSING OFFICER EXCEPT HIS BELIEF THAT ASSESSEE IS NOT EXPECTED TO SELL SHARES BELOW THE BOOK VALUE SECTION 48 CLEARLY STATES THAT FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN OF SHARES, IT IS ONLY T HE SUM RECEIVED WHICH CAN BE CONSIDERED FOR CALCULATION OF CAPITAL GAIN. IN VIEW OF THE ABOVE, WE ARE OF T HE CONSIDERED OPINION THAT THE L D. CIT(A) HAS RIGHTLY CONSIDERED THE LOSS DECLARED BY ASSESSEE. IN VIEW OF THE ABOVE, ITA NO. 4938 /DEL /2011 ADITYA GUPTA 6 WE DO NOT SEE ANY REASON TO INTE RFERE IN THE ORDER OF LD. CIT(A). 8 . SINCE, THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE CASE OF SH. ASHISH GUPTA, MEERUT (SUPRA). SO, RESPECTFULLY FOLLOWING THE ORDER DATED 09.08.2012 IN ITA NO. 225/DEL/2012 FOR THE ASSESSM ENT YEAR 2002 - 03 IN THE CASE OF ACIT, CIRCLE - 1, MEERUT VS SH. ASHISH GUPTA, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPAR T MENT. 9 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 27 /02 /2015 ) SD/ - SD/ - ( C. M GARG ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 /02 /2015 *SUBODH* COPY FORWARDED TO: 1. AP PELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR