ITO, Ward - 12(3), Kolkata, Kolkata V. M/s. Khaitan Polyfab Pvt. Ltd., Kolkata

ITA 608/KOL/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5013 (ITAT-KOLKATA)
• Duration Of Justice: 7 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-03-2016
• Assessment Year: 1999-2000
• Appeal Filed On: 20-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT DAS J
• Keywords: Share purchase agreement
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 507 / KOL / 2012 & ITA NO.608/KOL/2009 ASSESSMENT YEARS :2003-04 & 1999-00 ITO WARD-12(3), P-7, CHOWRINGHEE SQURE, AAYAKAR BHAWAN, 7 TH FLOOR, KOLKATA-700 069 V/S . M/S KHAITAN POLYFAB PVT. LTD. 25/8, D.H. ROAD, MERLINE ESTATE, FLAT NO. 3F, KOLKATA-700 008 [ PAN NO.AABCK 0999 E ] /APPELLANT .. / RESPONDENT /BY REVENUE SHRI SANJIT DAS, JCIT-DR /BY ASSESSEE SHRI SANJAY MODI, FCA /DATE OF HEARING 14-03-2016 ! /DATE OF PRONOUNCEMENT 22-04-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS BY REVENUE ARE ARISING OUT OF ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA BY DIFFERENT DAT E I.E. 16.01.2012 & 19.01.2009. ASSESSMENTS WERE FRAMED BY ITO WARD-12( 3), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) VIDE THEIR ORDERS DATED 28.03.2006 AND 29.12.2006 FOR ASSESSME NT YEARS 2003-04 & 1999-00 RESPECTIVELY. ITA NO.507/KOL/12 & 608/KOL/09 A.YS 03- 04 & 99-00 ITO WD-12(3) KOL. V. M/S KHAITAN POLYFAB PVT.LT D. PAGE 2 2. WE HEARD THEM TOGETHER AND DEEM IT APPROPRIATE T O DISPOSE OF THEM BY THIS COMMON ORDER. FIRST WE TAKE UP ITA NO.507/KOL/2012 FOR AY 03-04. 3. THE SOLE ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. 1.2 6 CRORES ON ACCOUNT OF LOSS ON THE UNDISCLOSED SALE OF SHARES. THE EFFECTIVE GR OUND OF APPEAL RAISED BY REVENUE IS REPRODUCED BELOW:- 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW LOSS OF RS.1,26,00,000/- ON ACCOUNT OF SALE OF 14,00,000 SHARES OF TRIBHUVA N PROPERTIES LTD., WHEN SUCH SHARES WERE NOT DISCLOSED IN THE RETURN. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRE SENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF INVESTMENT & SHARES DEALING. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS CLAIM ED TRADING LOSS ON PURCHASE AND SALE OF SHARES AS DETAILED UNDER : NAME OF SHARE PURCHASE SALES LOSS QTY RATE VALUE RATE VALUE TRIBHUVAN PROPERTIES LTD. 900000 10.50 9450000 1.50 1350000 8100000 TRIBHUVAN PROPERTIES LTD. 500000 10.50 5250000 1.50 750000 4500000 1400000 14700000 2100000 12600000 DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED T HAT THE AFORESAID SHARES WERE NOT REFLECTING IN THE FINANCIAL STATEME NTS OF EARLIER YEARS. ACCORDINGLY THE AO HAS DISALLOWED THE CLAIM AND MAD E THE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. CI T(A) WHO DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF LOSS ON SALE OF SHARES BY OBSERVING AS UNDER :- ITA NO.507/KOL/12 & 608/KOL/09 A.YS 03- 04 & 99-00 ITO WD-12(3) KOL. V. M/S KHAITAN POLYFAB PVT.LT D. PAGE 3 3.4 I HAVE CONSIDERED THE ABOVE REPORT AND ALSO TH E SUBMISSION OF THE LD. A/R. THE LD. CIT HAS HELD IN APPEAL ORDER NO. 4 1/CIT(A)-XXXII/WD- 12(3)/08-09/KOL DATED 19.01.09 THAT THE SHARES WERE DULY REFLECTED IN THE BALANCE SHEET OF THE APPELLANT COMPANY AS ON 31 .03.1999. HE HAS ALSO HELD THAT THE PAYMENT FOR THE PURCHASE OF SHAR ES WAS MADE OUT OF ITS BANK ACCOUNT. THE REMAND REPORT DATED 05.10.200 9 HAS BEEN SUBMITTED BY THE ASSESSING OFFICER IN A ROUTINE MAN NER WITHOUT VERIFYING THE DETAILS. CONSIDERING THE FACTS OF THE CASE, I H OLD THAT THE ASSESSING OFFICER HAS WRONGLY DISALLOWED THE LOSS OF RS.1,26, 00,000/- ON ACCOUNT OF SALE OF 14,00,000 SHARES OF TRIBHUVAN PROPERTIE S LTD. ACCORDINGLY, HE IS DIRECTED TO ALLOW THE SAID LOSS OF RS.1,26,00 ,000/- ON ACCOUNT OF SALE OF 14,00,000 SHARES OF TRIBHUVAN PROPERTIES LT D. THIS GROUND OF APPEAL IS ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR BEFORE US SUBMITTED THAT THAT THE SHARE CERTIFICATES AND DOCUMENTS FILED FOR THE TRANSFER OF SHARES WERE NOT FURNISHED BEFORE THE AO AT THE TIME OF ASSESSMENT. THE LD CIT(A) HAS GIVEN REL IEF TO THE ASSESSEE ON THE BASIS OF FRESH EVIDENCE WITHOUT RECORDING THE REASO N FOR ADMITTING THE SAME AS PER RULE 46A OF IT RULES 1962. THE DR FURTHER SUBMI TTED THAT WHETHER THE PAPER BOOK WAS FILED BEFORE THE LD CIT(A) IS ALSO N OT CLEAR AND VEHEMENTLY SUPPORTED THE ORDER OF AO. ON THE OTHER HAND, LD AR SUBMITTED THAT NO NEW EVIDENCE WAS FILED BEFORE THE LD CIT(A) AND ALL THE SE PAPERS WERE ALREADY SUBMITTED BEFORE THE AO WHILE FRAMING THE ASSESSMEN T ORDER. ALL THE AFORESAID SHARES WERE DULY REFLECTED IN THE BALANCE SHEET FOR THE YEAR 1999-00 AND RELIED ON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID DISCUSSION WE FIND THAT THE ASSESSEE HAS CLAIMED LOSS ON THE SALE OF 14 LACS SHARES OF M/S TRIBHUVAN PROPERTIES LTD BUT THE AO DISALLOWED THE SAME ON THE GROUND THAT THE SHARES W ERE NOT REFLECTED IN THE FINANCIAL STATEMENTS OF THE ASSESSEE IN THE EARLIER YEARS THOUGH THE ASSESSEE CLAIMED TO PURCHASE THESE SHARES FROM RAMPUR INTERN ATIONAL LTD. IN THE FINANCIAL YEAR 1998-99. THE LD. DR DREW OUR ATTENTI ON ON THE PAPER BOOK FILED ITA NO.507/KOL/12 & 608/KOL/09 A.YS 03- 04 & 99-00 ITO WD-12(3) KOL. V. M/S KHAITAN POLYFAB PVT.LT D. PAGE 4 FOR THE ASSESSMENT YEAR 1999-2000 WHERE THE NECESSA RY DETAILS FOR THE PURCHASE OF THE SHARES FROM RAMPUR INTERNATIONAL LI MITED, BANK STATEMENT FOR THE PAYMENT OF THE SHARES, BALANCE SHEET OF THE ASS ESSEE, SHARE CERTIFICATES AND CONFIRMATION FROM TRIBHUBAN PROPERTIES LTD WERE PLACED. FROM THE SUBMISSION, WE FIND THAT ALL THE TRANSACTIONS WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE FINANCIAL ST ATEMENTS. HOWEVER FOR THE YEAR FINANCIAL YEARS 1999-00 AND 2000-01 THE AFORES AID 14 LACS SHARES WERE SHOWN IN THE NAME OF ANSUMAN INFRA PRIVATE LTD BY M ISTAKE AND THEREFORE SUCH DIFFERENCE IN THE SHARES HELD BY THE ASSESSEE IN TRIBHUBAN PROPERTIES LTD WAS ARISING. WE FIND THAT THIS AS CLERICAL ERRO R AND HAS NO BEARING IN THE INCOME OF THE ASSESSEE. ACCORDINGLY IN OUR CONSIDER ED VIEW, THE SHARES WERE GENUINELY PURCHASED BUT WRONGLY RECORDED IN THE NAM E OF ANSUMAN INFRA PRIVATE LTD IN THE BOOKS. ACCORDINGLY WE HAVE NO HE SITATION IN UPHOLDING THE ORDER OF LEARNED CIT(A). HENCE THIS GROUND OF APPEA L OF THE REVENUE IS DISMISSED. COMING TO THE ITA NO.608/KOL/2009 FOR A.Y. 99-00. 7. THE SOLITARY ISSUE RAISED BY REVENUE IN THIS APP EAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR RS.1. 47 CRORES ON ACCOUNT OF UNDISCLOSED PURCHASE OF SHARES. 8. AT THE OUTSET IT WAS OBSERVED THAT THE CASE WAS REOPENED U/S 148 OF THE ACT ON THE INFORMATION GATHERED DURING THE ASSESSME NT PROCEEDINGS FOR THE AY 2002-03 U/S 143(3) OF THE ACT THAT 14 LACS SHARE S OF TRIBHUVAN PROPERTIES PVT. LTD. WERE SOLD BY THE ASSESSEE IN THE AY 2002- 03 BUT THEIR CORRESPONDING PURCHASE WERE NOT DISCLOSED FOR RS. 1.47 CRORES IN THE EARLIER YEARS. HOWEVER THE LD. CIT(A) GRANTED THE RELIEF TO THE ASSESSEE. 9. BEFORE US THE LD. AR FILED A PAPER BOOK HAVING P AGES 1 TO 23 AND DREW OUR ATTENTION ON PAGE 19 OF THE PAPER BOOK WHERE AF ORESAID SHARES WERE DULY ITA NO.507/KOL/12 & 608/KOL/09 A.YS 03- 04 & 99-00 ITO WD-12(3) KOL. V. M/S KHAITAN POLYFAB PVT.LT D. PAGE 5 DISCLOSED IN THE SCHEDULE C OF THE BALANCE SHEET. THE BANK STATEMENT IS ALSO PLACED ON PAGES 8 TO 12 OF THE PAPER BOOK REFLECTIN G THE PAYMENT FROM THE DISCLOSED BANK ACCOUNT FOR THE PURCHASE OF THE SHAR ES. ACCORDINGLY WE ARE INCLINED NOT TO INTERFERE IN THE ORDER OF LD. CIT(A ). HENCE THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF REVENUE STAND DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT 22/ 04/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 22 / 04 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /REVENUE-ITO WARD-12(3), P-7, CHOWRINGHEE SQ. AAYAK AR BHAWAN, 7 TH FL, KOL-69 2. /ASSESSEE-M/S KHAITAN POLYFAB PVT. LTD. 25/8, D.H.R OAD, MERLINE ESTATE, FLAT NO. 3F, KOLK ATA-700 008 3.#,#-. / / CONCERNED CIT KOLKATA 4. /- / CIT (A) KOLKATA 5.23455-., -. !, / DR, ITAT, KOLKATA 6.489:; / GUARD FILE. BY ORDER/ , /TRUE COPY/ /# -. !,