ACIT CEN CIR 24 & 26, MUMBAI V. KULDEEP SINGH BINDRA, MUMBAI

ITA 6256/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2499 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 11-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRITA MISRA
• Keywords: Unexplained cash credit; Unexplained investment; Income from undisclosed sources; Residential status; Search and seizure; Question of law
• Section: 143(3); 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER / I .T A NO S . 6256 & 6257/MUM/2012 ( / ASSESSMENT YEAR S : 2005 - 06 & 2006 - 07 THE ACIT, CC - 21, AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. SHRI KULDEEP SINGH BINDRA, A - 71, COZY HOME, 251, PALI HILL, BANDRA (W), MUMBAI - 400 050 ./ ./ PAN/GIR NO. : AADPB 1771A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: MS. AMRITA MISRA / RESPONDENT BY: SHRI RAJESH SANGHVI / DATE OF HEARING : 2 3 .1 1 . 2015 / DATE OF PRONOUNCEMENT : 2 3 .1 1 .2015 / O R D E R PER N.K. BILLAIYA, AM: TH ESE ARE APPEAL S BY THE REVENUE DIRECTED AGAINST THE ORDER S OF THE LD. CIT(A) - 39 , MUMBAI D ATED 27.7.2012 PERTAINING TO ASSESSMENT YEAR S 200 5 - 06 & 2006 - 07 . 2. IN BOTH THESE YEARS THE COMMON GRIEVANCE OF THE REVENUE RELATES TO THE DELETION OF THE ADDITION MADE U/S. 68 OF THE ACT RELATING TO PURCHASE AND SALE OF SHARES WHICH WERE TREATED BY THE AO AS SHAM TRANSACTION. ITA. NO S . 6256 & 6257/M/12 2 3. REPRESENTATIVES FROM BOTH THE SIDES AGREED THAT FACTS IN ISSUES ARE COMMON IN BOTH THESE YEARS AND ON THIS CONCESSION, WE DECIDED TO DISPOSE OF THESE APPEALS BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 4. WE ARE TAKING THE FACTS FOR A.Y. 2005 - 06. A SEARCH AND SEIZU RE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED ON 8.5.2007 AT THE RESIDENTIAL/BUSINESS PREMISES OF THE BINDRA GROUP OF CASES. THE ASSESSEE WAS ONE OF THE PARTIES COVERED IN THE SEARCH OPERATION. 5. STATUTORY NOTICES U/S. 153A/142(1) AND 143(2) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE. 6. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAINS FROM SALE OF SHARES OF RAMKRISHNA FINCAP LTD. THE AO FURTHER OBSERVED THAT NOT ONLY THE ASSESSEE BUT HIS BROTHER ALSO HAS SHOWN LONG TERM CAPITAL GAINS ON THE SALE OF SHARES OF THE SAME COMPANY. THE DETAILS OF PURCHASE AND SALE READ AS UNDER: NAME OF SCRIP PUR DT. BROKER QTY. AMT. SALE DT. BROKER QTY. AMT. RAMKRISHNA FINCAP LTD. 25.7.03 PRAKASH NAHTA & CO. 65000 163800 29.11.04 30.11.04 2.12.04 21.12.04 23.12.04 28.2.05 5.4.05 8.4.05 25.4.05 25.4.05 ASHOK KAYAN, KOLKATA 4000 10000 4000 5000 5000 6000 10000 8000 7000 6000 551440 1348600 555440 714250 724251 1024920 1838200 1462560 1314670 1120860 ITA. NO S . 6256 & 6257/M/12 3 6.1. AFTER PERUSING THE DETAILS MENTIONED HEREINABOVE, THE AO OBSERVED THAT THE SHARES WERE PURCHASED AT AN EXTREMELY LOW PRICE WHICH WERE SOLD AT A CONSIDERABLY HIGH PRICE. TREATING THE SHARE AS A PENNY STOCK, THE AO PROCEEDED BY DISCUSSING VARIOUS MODUS OP ERANDI ADOPTED BY THE OPERATORS IN ORDER TO FABRICATE SHARE TRANSACTION. INFORMATIONS WERE GATHERED FROM THE BROKER, KOLKATA STOCK EXCHANGE ETC. THE AO FINALLY CONCLUDED BY TREATING THE ENTIRE TRANSACTION AS A SHAM TRANSACTION AND DRAWING SUPPORT FROM TH E FINDINGS GIVEN IN THE CASE OF THE BROTHER OF THE ASSESSEE SHRI RANJIT SINGH BINDRA THE PROFIT EARNED BY THE ASSESSEE DURING THE YEAR WAS ADDED BACK TO THE RETURNED INCOME AS UNEXPLAINED CASH CREDIT. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A). IT WAS STRONGLY CONTENDED THAT DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, NO EVIDENCE TO SHOW THAT EITHER THE PURCHASE OF SHARES OR SALE OF SHARES ARE BOGUS WAS FOUND. THERE WAS NO EVIDENCE FOUND TO SHOW THAT THE ASSESSEE RO U TED HIS UNACCOUNTED INCOME AND CONVERTED AS LONG TERM CAPITAL GAINS . STRONG RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AL C ARGO GLOBAL LOGISTICS IN ITA NOS 5018 TO 5022 AND 5099/M/2010. 7.1. AFTER CONSIDER ING THE FACTS AND THE SUBMISSIONS THE LD. CIT(A) PROCEEDED BY DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE AND HAVING DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THE LD. CIT(A) AT PAGE - 40 ON PARA - 12 HELD AS UNDER: I HAVE ALREADY ALLOWED THE ISSUE ON M ERITS. IN VIEW OF THIS APPELLANTS TECHNICAL CONTENTION THAT THE ISSUE OF LONG TERM CAPITAL GAINS COULD NOT HAVE BEEN TAKEN IN THE PROCEEDINGS U/S. 143(3) R.W.S. 153A OF THE I.T. ACT IN VIEW OF THE MUMBAI ITATS SPECIAL BENCHS DECISION IN THE CASE OF ITA. NO S . 6256 & 6257/M/12 4 M /S. ALL CARGO GLOBAL LOGISTICS LTD. IS NOT FURTHER DELIBERATED UPON. 7.2. SINCE THE ADDITION WAS DELETED ON MERITS OF THE CASE, THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. LD. DR ALSO PLACED RELIANCE ON THE DECISIONS OF THE TRIBUNAL IN THE CASE OF SHRI ARVIND M. KARIYA IN ITA NO. 7024/M/10 AND SHAMIM M. BHARWANI IN ITA NO. 4906/M/2011. 9. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER A UTHORITIES. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE THE DECISION OF THE TRIBUNAL IN THE CASE OF ASSESSEES BROTHER RANJIT SINGH BINDRA, THE FINDINGS OF WHICH WERE FOLLOWED BY THE AO. 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDER OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE JUDICIAL DECISIONS RELIED UPON BY THE LD. DR. 10.1. AT THE VERY OUTSET, WE HAVE TO STATE THAT THE DECISIONS RELIED UPON BY THE LD. DR ARE MISPLACED ON FACTS FOR THE SIMPLE REASON THAT THE CASE IN HAND BE FORE US RELATES TO THE ASSESSMENTS MADE U/S. 153A OF THE ACT PURSUANT TO SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE ACT AND IT IS NOW A SETTLED PROPOSITION OF LAW THAT SUCH ASSESSMENTS HAVE TO BE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HONBLE J URISDICTIONAL HIGH COURT GIVEN IN THE CASE OF ALL CARGO GLOBAL LOGISTICS IN INCOME TAX APPEAL NO. 1969 OF 2013 AND CONTINENTAL WAREHOUSING CORPN., IN INCOME TAX APPEAL NO. 523 OF 2013 AND ALSO IN THE CASE OF MURLI AGRO PRODUCTS. THE RELEVANT ITA. NO S . 6256 & 6257/M/12 5 PORTION OF THE DECISION IN THE CASE OF CONTINENTAL WAREHOUSING CON. (SUPRA) READS AS UNDER: ONCE IT IS HELD THAT THE ASSESSMENT HAS ATTAINED FINALITY, THEN THE AO WHILE PASSING THE INDEPENDENT ASSESSMENT ORDER U/S. 153A R.W. S 143(3) OF THE I.T. ACT COULD NOT HAVE DISTURBED THE ASSESSMENT/REASSESSMENT ORDER WHICH HAS ATTAINED FINALITY, UNLESS THE MATERIALS GATHERED IN THE COURSE OF THE PROCEEDINGS U/S. 153A OF THE INCOME TAX ACT ESTABLISH THAT THE RELIEFS GRANTED UNDER THE FINALIZED ASSESSMENT/REASSESSMENT WERE CON TRARY TO THE FACTS UNEARTHED DURING THE COURSE OF 153A PROCEEDINGS. IF THERE IS NOTHING ON RECORD TO SUGGEST THAT ANY MATERIAL WAS UNEARTHED DURING THE SEARCH OR DURING THE 153A PROCEEDINGS, THE AO WHILE PASSING ORDER U/S. 153A R.W.S. 143(3) CANNOT DISTUR B THE ASSESSMENT ORDER. 10.2. THE HONBLE HIGH COURT HAD AN OCCASION TO CONSIDER THE FOLLOWING QUESTIONS OF LAW: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS CORRECT IN NARROWING DOWN THE SCOPE OF ASSESSMENT U/S. 153A IN RESPECT OF COMPLETED ASSESSMENTS BY HOLDING THAT ONLY UNDISCLOSED INCOME AND UNDISCLOSED ASSETS DETECTED DURING SEARCH COULD BE BROUGHT TO TAX? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS CORRECT IN LAW IN HOLDING THAT THE SCOPE OF SEC. 153A IS LIMITED TO ASSESSING ONLY SEARCH RELATED INCOME, THEREBY DENYING REVENUE THE OPPORTUNITY OF TAXING OTHER ESCAPED INCOME, THAT COMES TO THE NOTICE OF THE AO.? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE HONBLE ITAT WAS RIGHT IN LIMITING THE SCOPE OF SEC. 153A ONLY TO UNDISCLOSED INCOME WHEN AS PER THE SECTION THE AO HAS TO ASSESS THE TOTAL INCOME OF THE SIX ASSESSMENT YEARS? - ITA. NO S . 6256 & 6257/M/12 6 A ND THE HONBLE HIGH COURT OF BOMBAY FINALLY HELD AS UNDER: WE, THEREFORE, DISMISS THE REVENUES APPEAL AND ANSWER THE SUBSTANTIAL QUESTION OF LAW AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 10.3. IN THE FACTS OF THE CASE IN HAND ARE CONSIDERED IN THE LIGHT OF THE AFOREMENTIONED DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. UNDISPUTEDLY, DURING THE COURSE OF THE SEARCH AND SEIZURE OPERATION, NOT A SINGLE PIECE OF PAPER WAS FOUND RELATING TO T HE SHARE TRANSACTION. MOREOVER, THE ASSESSEE HAS FILED ORIGINAL RETURN ON 23.9.2005 IN WHICH THE GAINS ARISING OUT OF SHARE TRANSACTION WAS OFFERED TO TAX AND THERE IS NO MATERIAL FOUND AT THE TIME OF SEARCH WHICH CAN BE SAID TO BE AN INCRIMINATING MATERI AL TO JUSTIFY THE IMPUGNED ADDITIONS AND IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF THE MATERIALS FOUND AT THE TIME OF SEARCH. CONSIDERING THE FACTS IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE HIGH COU RT OF BOMBAY (SUPRA), WE DO NOT FIND ANY REASON/JUSTIFICATION IN MAKING THE IMPUGNED ADDITIONS U/S. 68 OF THE ACT. ORDER OF THE LD. CIT(A) IS ACCORDINGLY UPHELD. THE APPEAL FILED BY THE REVENUE ON THIS ISSUE IS DISMISSED. ITA NO. 6257/M/2012 - A.Y. 2006 - 07 11. THE ANOTHER GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 94,88,124/ - . 12. THE ENTIRE ADDITION REVOLVES AROUND THE FACTS WHETHER THE ASSESSEE IS A RESIDENT OR A NON - RESIDENT AT THAT POINT OF TIME. THIS ISSUE WAS CONSIDERED BY THE LD. CIT(A) AT PARA - 9.5 OF HIS ORDER, ITA. NO S . 6256 & 6257/M/12 7 WHEREIN HE REFERS TO A REMAND REPORT CALLED FROM THE AO DATED 15.8.2011. THE SAID REMAND REPORT READS AS UNDER: ADDITION ON ACCOUNT OF INVESTMENT IN DUBAI PROPERTY AS NRI A.Y. 2006 - 07 IN THE A.Y. 2006 - 07 THE ASSESSEE WAS TREATED AS RESIDENT AND CONSEQUENTLY THE INVESTMENT MADE IN JUNE, 2005, IN GODOWNS AT INDIGO STORAGE CITY FOR UAE DOIRHAMS 790,677/ - (EQUIVALENT TO RS. 94,88,124) AT DUBAI WAS TREATED AS UNEXPLAINED INVESTMENT AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE AO TREATED THE ASSESSEE AS RESIDENT FOR THE PREVIOUS YEAR: 05 - 06 RELEVANT TO ASSESSMENT YEAR 2006 - 07 AND ALL FOREIGN INCOME OF A RESIDENT BEING TA XABLE IN INDIA AS PER SEC. 5 & SEC. 4 READ WITH THE OTHER PROVISIONS OF THE I.T. ACT, THE SAID ADDITION WAS MADE. THE ASSESSEE HAS SUBMITTED A COLOUR ZEROX COPY OF HIS PASSPORT (PASSPORT NO. F 0700167 DTE OF ISSUE : 6.9.2004) ALONGWITH A WORKING OF THE D EPARTURE AND ARRIVAL DATES FOR THE PERIOD 1.4.2005 TO 31.3.2006, WHICH PRIMA FACIE SHOWS THAT THE ASSESSEE WAS OUT OF INDIA FOR 302 DAYS. 12 . 1. BASED ON THIS REMAND REPORT OF THE AO, THE LD. CIT(A) AT PARA - 10 ON PAGE - 18 OF HIS ORDER HELD AS UNDER: I HAVE CONSIDERED THE ISSUE. I HAVE GONE THROUGH THE APPELLANTS SUBMISSIONS, A.OS REMAND REPORT AND ALSO THE REJOINDER FILED BY THE APPELLANT. FROM ALL THESE, IT IS CLEAR THAT THE APPELLANT WAS A NON RESIDENT DURING THE ACCOUNTING PERIOD RELEVANT TO T HE ASSESSMENT YEAR 2006 - 07. THE TRANSACTIONS RELATED TO THE INVESTMENTS WERE DONE IN ABROAD AND THERE IS NO EVIDENCE TO SHOW THAT THE APPELLANT EARNED ANY INCOME IN INDIA WHICH WAS TRANSFERRED TO UAE AND USED FOR THE TRANSACTIONS IN GODOWN. SINCE THE AP PELLANT IS A NON RESIDENT, THE INCOME EARNED FROM ABROAD CANNOT BE TAXED IN INDIA. IN VIEW OF THIS, I HOLD THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 94,88,124/ - . ITA. NO S . 6256 & 6257/M/12 8 12. 2. AS THE FACTS RELATING TO THE NON - RESIDENTIAL STATUS OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO IN THE REMAND PROCEEDINGS AS MENTIONED HEREINABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 13. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 23 RD NOVEMBER , 2015 . SD/ - SD/ - ( PAWAN SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 23 RD NOVEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI