Sapna Nahata , Bangalor e V. The Income Tax Officer Ward-4(3)(5), Bangalore

ITA 581/BANG/2018

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5474 (ITAT-BANGALORE)
• Duration Of Justice: 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L V BHASKAR REDDY
• Keywords: Unexplained investment; Principle of natural justice; Cost of acquisition; Accommodation entries; Reassessment proceedings
• Section: 234B; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO S . 581 & 582 / BANG/201 8 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 SMT. SAPNA NAHATA, PROP.: NATIONAL CONTAINER, NO. 8/2, YELACHANAHALLI, KANAKAPURA ROAD, BANGALORE 560 078. PAN: ADUPK3438M VS. THE INCOME TAX OFFICER, WARD 4 (3) (5), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SMT. SUMAN LUNKAR, CA RESPONDENT BY : SHRI L.V. BHASKAR REDDY, ADDL. CIT (DR) DATE OF HEARING : 20 . 0 3 .2018 DATE OF PRONOUNCEMENT : 20 . 0 3 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND TH ESE ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A)-4, BANGALORE BOTH DATED 21.11.2017 FOR ASSESSMENT YEARS 2009-10 AND 2010-11. BOTH THESE A PPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2009-10 IN ITA NO. 581/BANG/2018 ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2.1 IN ANY CASE. THE CONDITIONS PRECEDENT FOR THE I SSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, THE RE-OPENING OF ASSE SSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/CON FIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. ITA NOS. 581 & 582/BANG/2018 PAGE 2 OF 6 2.2 IN ANY CASE THE ASSESSING OFFICER HAVING NOT CO MPLIED WITH LEGAL PROVISIONS / PROCEDURE FOR REOPENING / REASSESSMENT , THE CONSEQUENTIAL ORDER BECOMES' BAD IN LAW AND LIABLE TO BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE AB SENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE, SO UGHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED . 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLA NT AND THE LAW APPLICABLE. 3.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARC LI ABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD IN ANY CASE, ERRED IN TREATING A SUM OF RS. 4,70,479/- BEING PURCHASE CONSIDERATION OF SHARES A S UNEXPLAINED INVESTMENT AND TAXING THE SAME UNDER THE HEAD `INCO ME FROM OTHER SOURCES' AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE ACTION OF AUTHORI TIES BELOW HAS NO SUPPORT IN LAW; IS CONTRARY TO FACTS AND EVIDENCE A VAILABLE AND THEREFORE DESERVES TO BE REJECTED. 5.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) TAXING/ CONFIRMING THE PURCHASE CONSIDERATION OF SHARES AS INCOME UNDER THE HEAD OTHER SOURCES. B) NOT CONSIDERING THE FACT THAT THE SHARES WERE DE MATERIALIZED. C) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN S HARES ARE FRAUDULENT D) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HA S OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY WOU LD COME BACK IN THE GUISE OF CAPITAL GAINS. THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW I S TO BE DISREGARDED. 5.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WI THOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND ITA NOS. 581 & 582/BANG/2018 PAGE 3 OF 6 CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 6. THE APPELLANT HAD ACTUALLY PURCHASED THE SHARES WITH THE EXPLAINABLE SOURCE WHICH WERE SUBSEQUENTLY DEMATERI ALIZED. THE TRANSACTION BEING GENUINE IN NATURE SHOULD HAVE BEE N ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST U/S 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN LEVIED ERRONEO USLY IS TO BE DELETED. 8. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE ASSESSMENT OF PURCHASE COST OF SHARES AS UNEXPL AINED INVESTMENT BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2010-11 IN ITA NO. 582/BANG/2018 ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HIM AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS BEING BAD IN LAW, VOID AB-INITIO ARE REQUIRED TO BE QUASHED. 2.1 IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE I SSUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT, THE RE-OPENING OF ASSE SSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/CON FIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. 2.2 IN ANY CASE THE ASSESSING OFFICER HAVING NOT CO MPLIED WITH LEGAL PROVISIONS / PROCEDURE FOR REOPENING / REASSESSMENT , THE CONSEQUENTIAL ORDER BECOMES BAD IN LAW AND LIABLE T O BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE AB SENCE OF THE CROSS EXAMINATIONS OF THE PERSONS WHOSE AVERMENTS ARE SOU GHT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER, MAKES THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED . 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER, HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PROPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLA NT AND THE LAW APPLICABLE. 3.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSED BY THE AUTHORITIES BELOW BEING CONTRARY TO BINDING DICTUM OF THE ITA NOS. 581 & 582/BANG/2018 PAGE 4 OF 6 JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LI ABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD IN ANY' CASE, ERRED IN TREATING A SUM OF RS. 5,45,007/- BEING SHORT TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS 'INCOME FROM OTHER SOURCES' AND THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SA ME. THE ACTION OF AUTHORITIES BELOW HAS NO SUPPORT IN LAW; IS CONTRAR Y TO FACTS AND EVIDENCE AVAILABLE AND THEREFORE DESERVES TO BE REJ ECTED. 5.1 IN ANY CASE AND WITHOUT FURTHER PREJUDICE, THE AUTHORITIES BELOW HAVE ERRED IN: A) TAXING/ CONFIRMING THE SHORT TERM CAPITAL GAIN E ARNED ON SALE OF SHARES AS INCOME UNDER THE HEAD OTHER SOURCES. B) NOT CONSIDERING THE FACT THAT THE APPELLANT HAD EARNED SHORT TERM CAPITAL GAIN(STT SUFFERED) AND OFFERED THE SAME FOR TAXATION. C) HOLDING WITHOUT BASIS THAT THE TRANSACTIONS IN S HARES ARE FRAUDULENT D) ALLEGING WITHOUT ANY BASIS THAT THE APPELLANT HA S OBTAINED ACCOMMODATION ENTRIES AND APPELLANT'S OWN MONEY COM E BACK IN THE GUISE OF CAPITAL GAINS. THE CONCLUSIONS / OBSERVATIONS OF AUTHORITIES BELOW BEING TOTALLY ERRONEOUS AND WITHOUT BASIS BOTH ON FACTS AND LAW I S TO BE DISREGARDED. 5.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WI THOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 6. THE APPELLANT HAD ACTUALLY SOLD SHARES THROUGH D EMAT ACCOUNT AND HAD EARNED CAPITAL GAIN THEREON AND SAME NEEDS TO B E ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAY INTERE ST. THE INTEREST HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 8. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADD UCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST THE INCOME FROM SHORT TERM CAPITAL GAIN EARNED ON S ALE OF SHARES AS RETURNED BY THE APPELLANT BE ACCEPTED, THE ASSESSME NT OF SHORT TERM CAPITAL GAIN EARNED ON SALE OF SHARES AS INCOME FRO M OTHER SOURCES BE DELETED AND THE INTEREST LEVIED BE ALSO DELETED. ITA NOS. 581 & 582/BANG/2018 PAGE 5 OF 6 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT IN THE PRESENT CASE, THE ADDITION WAS MADE BY THE AO ON THE BASIS OF STATEMENT OF SHRI MUKESH CHOKSI, DIRECTOR OF M/S. MAHASAGAR SECURITIE S PVT. LTD. SHE SUBMITTED THAT UNDER SIMILAR FACTS IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO IN ITA NO. 2168/BANG/2016 DATED 17.03.2017, THE TRIBUN AL HAS RESTORED THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION WI TH THE SAME DIRECTIONS AS WERE GIVEN BY HON'BLE KARNATAKA HIGH COURT IN A JUDGMENT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO. 39370/201 4 DATED 02.02.2015. SHE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND REQUEST ED THAT IN THE PRESENT CASE ALSO, THIS ISSUE SHOULD BE RESTORED BACK TO THE FIL E OF AO FOR FRESH DECISION WITH THE SAME DIRECTIONS. THE LD. DR OF REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND FORCE IN THE SUBMISSIONS OF LD. AR OF ASSESSEE BECAUSE NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY LD. DR OF REVENUE. I REPRODUCE PARAS 5 AND 6 OF THIS TRIB UNAL ORDER RENDERED IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO(SUPRA). T HE SAME READS UNDER:- 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRS T OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTH ARI (SUPRA) AND THIS IS AS UNDER:- 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS A DVERTED TO ABOVE, AND AS THE PETITIONER HAS BEEN DENIED AN OPP ORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEA RING TO THE PETITIONER AND BY FURNISHING THE DETAILS/COPY OF TH E STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BE EN PASSED.' 6. FROM THE ABOVE PARA FROM THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BAC K TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE S TATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH C OURT IN THE EARLIER PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESE NT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANY DIFFERENCE IN FACTS AND HENCE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE O RDER OF LD CIT(A) ITA NOS. 581 & 582/BANG/2018 PAGE 6 OF 6 AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FR ESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE HON'BLE KARNAT AKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPROD UCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FO R AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. 6. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, I DE CIDE THE ISSUE IN THE PRESENT CASE ALSO ON SIMILAR LINE AND RESTORE THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CHANDRA DEVI KOTHARI(SUPRA) AS PER PARA 8 OF THIS JUDGMENT WHICH IS REPRODUCED ABOVE.IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR REGARDING MERIT OF THE ADDITION. 7. REGARDING THE SECOND ISSUE RAISED IN THESE APPEA LS IN RESPECT OF VALIDITY OF REASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY LD. A R OF ASSESSEE THAT THIS ISSUE IS NOT PRESSED AND ACCORDINGLY THIS ISSUE IS REJECTED AS NOT PRESSED. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 20 TH MARCH, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.